Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

HUMBER BRIDGE BILL

As amended, considered; to be read the Third time.

GREATER LONDON COUNCIL (GENERAL POWERS) BILL (By Order)

Order for Second Reading read.

To be read a Second time upon Tuesday next at Seven o'clock.

Oral Answers to Questions — EMPLOYMENT

Unemployed Persons

Mr. Cormack: asked the Secretary of State for Employment whether he will give the latest figures for unemployment in England and Wales.

The Secretary of State for Employment (Mr. Maurice Macmillan): On 12th February there were 597,415 people unemployed in England and Wales and the rate of unemployment was 2·9 per cent. The figures are provisional.

Mr. Cormack: Is not this improvement an illustration of the success of the Government's policies and should it not make us even more aware of the danger in which the country stands at the moment? Would not all the achievements of the past three years be set at nought by ill-considered action on the part of the few over the next few weeks?

Mr. Macmillan: It shows that the Government's policies are being successful in increasing employment. There are

signs that investment too is increasing. The more stable our economy and the more successful we are in controlling inflation, the more likely this is to continue.

Mr. Prentice: Is the right hon. Gentleman aware that everyone welcomes any reduction in unemployment without any reservations? Will he answer two points? Does he agree that the figures announced last week no longer include over 11,000 temporarily stopped, so that a complete comparison with older figures should take this into account? Will he state firmly that a figure of 750,000 unemployed for the country as a whole is still intolerably high? Ought it not to remain the priority of the Government to take new measures to bring that figure down?

Mr. Macmillan: I certainly acknowledge the point the right hon. Gentleman has made about the temporarily stopped. That has been made clear in the presentation of the figures. The trend of unemployment as shown by the three-monthly moving averages is still significantly downwards and the fall in unemployment is the greatest at this time of the year since the war.

Mr. Marten: Is enough being done to help the mobility of labour so that people can move farther afield for their jobs if they so wish?

Mr. Macmillan: My hon. Friend has a valid point. The Government have stepped up the range of assistance provided for meeting the expenses of people living away from home and those incurred in household removal. About 13,440 people took advantage of these measures in the last nine months of 1972 as compared with 6,180 in the equivalent period of 1971.

Mr. Greville Janner: asked the Secretary of State for Employment by what percentage unemployment has increased in the city of Leicester since June 1970.

The Under-Secretary of State for Employment (Mr. Dudley Smith): Between June 1970 and February this year the unemployment rate for Leicester rose from 1·2 per cent. to 2·2 per cent., an increase of 1·0 percentage points. This takes no account of the seasonal factors involved.

Mr. Janner: Taking into account all the factors, has not the unemployment rate in the Leicester area doubled during this period? Is not the hon. Gentleman aware of the tremendous hardship caused by unemployment in a previously very prosperous city?

Mr. Smith: I think that the hon. and learned Gentleman over-eggs the pudding. Unemployment in Leicester has fallen by more than 800 in the past year, it has fallen by 350 in the past month and the rate now is well below the national average rate. I hope that the hon. and learned Gentleman will now underline this good news for his constituents, as he was eager to underline the temporary rise in unemployment towards the end of 1971.

Mr. Kenneth Lewis: Is my hon. Friend aware that these figures are highly satisfactory—

Mr. Janner: Absolute rubbish.

Mr. Lewis: —when one takes into account the recent influx of immigrant workers into Leicester with which Leicester is coping?

Mr. Smith: I am grateful to my hon. Friend for that sensible comment. The Uganda Resettlement Board's figures show that about 2,200 people have gone to Leicester of whom about 350 are registered as unemployed. The city has done an excellent job in accommodating them and getting them employment.

Mr. Stonehouse: asked the Secretary of State for Employment what is the latest figure of wholly unemployed in the West Midlands and in Walsall respectively; and what action he proposes to reduce these numbers.

Mr. Dudley Smith: On 12th February there were 3,381 people unemployed in the Walsall travel-to-work area and 61,577 in the West Midlands Region. The figures are provisional.
The West Midlands, including Walsall, should continue to benefit from the measures we have taken to stimulate employment in the country as a whole.

Mr. Stonehouse: Although that improvement is welcome, are not these figures still very serious? In regard to Walsall, what assessment has been made of the effects of the closure of the Tube

Investments factory? As for the West Midlands as a whole, is the Minister aware that the high interest rates which are now being charged by banks are a severe disincentive to many small industries to engage in the industrial reinvestment on which future employment will depend? Will the hon. Gentleman do something about that?

Mr. Smith: In regard to Tube Investments, we shall be prepared to do all we can to help those who may be displaced. With respect to the right hon. Gentleman, however, he paints far too gloomy a picture. The position in the West Midlands at the moment is very encouraging. There has been a fall of 10 per cent. in unemployment since last month. Over the past year the fall was 26,600, which represents a reduction of 30 per cent.—a considerable achievement.

Major-General Jack d'Avigdor-Gold-smid: Is my hon. Friend aware that in the neighbouring constituency of Lichfield and Tamworth the unemployment rate has considerably decreased?

Mr. Smith: Yes, Sir. This reflects the general decline which has been going on and shows that the Government's measures are working, and working very well.

Disabled Persons (Norwich)

Dr. Stuttaford: asked the Secretary of State for Employment if he is satisfied that there are adequate employment facilities in the Norwich area for the disabled.

Mr. Dudley Smith: The unemployment rate for the registered disabled people in the area is significantly lower than the national rate and is now lower than at any time during the last four years. I welcome this trend, although there is always room for further improvement.

Dr. Stuttaford: Does my hon. Friend agree that this is a satisfactory state of affairs? Has not this situation been revolutionised recently by the fact that more severely disabled people are more readily employed since Remploy negotiated a deal with a local firm? Will he also agree that there are several not so badly disabled persons who cannot get jobs? Does he further agree that if all employers took their share these too might find employment?

Mr. Smith: That is true and, like my hon. Friend, I pay tribute to the work done by Remploy. We are never satisfied that sufficient employers take the right number of disabled people and we work all the time to encourage them to take their share.

Mr. Molloy: Is the hon. Gentleman aware that the Fellowship of Workers for the Disabled and Handicapped recently presented a petition to Downing Street? Is he further aware that the gravamen of its case was that employers were not taking their proper quota of disabled people—people who can contribute to the wealth of the country? Will he look at this?

Mr. Smith: That does not arise on this Question, but there are strong feelings about it and the hon. Member knows that we are currently considering this matter. There are no ready answers but we are endeavouring to find a solution.

Mr. Money: Although we are all grateful for the better employment opportunities now available for disabled people in the eastern counties, may I ask my hon. Friend to say something about what is being done to provide training facilities for disabled people, particularly in East Anglia?

Mr. Smith: Not without notice. Norwich has no industrial rehabilitation unit but vocational training is available. Training facilities for the disabled have improved in East Anglia and elsewhere. Again, this is a subject which we have constantly under review. If we can provide extra facilities we will do so.

Energy Production

Mr. Eadie: asked the Secretary of State for Employment if he will give the number of vacancies notified to him that exist in industries in Scotland involved directly and indirectly in energy production; and what was the rate of contraction in these industries during 1972 and to the nearest available date in 1973.

The Minister of State, Department of Employment (Mr. R. Chichester-Clark): I will, with permission, circulate in the OFFICIAL REPORT a table showing the numbers of notified vacancies remaining unfilled in certain industries involved in energy production, together with certain information about the reduction in

numbers employed in some of these industries during 1972.

Mr. Eadie: Does the Minister accept that the House will want to study the figures when they are available, especially in relation to the location of the vacancies? Does he agree that the number of vacancies revealed should bear some relation to any policy decision that the Government will want to make about the exploitation of our indigenous energy resources?

Mr. Chichester-Clark: Of course one takes account what the hon. Gentleman says; it is obviously a factor. In January there were 123 notified unfilled vacancies in these industries in Scotland compared with 65 in 1972. During the past year the number of vacancies in all industries has more than doubled.

Following is the information:


NOTIFIED VACANCIES REMAINING UNFILLED IN CERTAIN INDUSTRIES IN SCOTLAND ON 3RD JANUARY 1973


Coal mining
…
55


Petroleum and natural gas
…
32


Coke ovens and manufactured fuel
…
—


Mineral oil refining
…
5


Gas
…
17


Electricity
…
14


Total
…
123

The statistics relate only to notified vacancies remaining unfilled and do not purport to measure the total unsatisfied demand for labour.

CONTRACTION IN EMPLOYMENT

The following figures have been supplied by the nationalised industries concerned.

Numbers employed at the beginning of 1972
Approximate reduction in numbers during 1972


Coal mining
…
28,900
2,000


Gas
…
7,800
200


Electricity
…
17,700
300

Community Industry

Mr. Milne: asked the Secretary of State for Employment if he will give details of the projects organised under the aupices of Community Industry in the Blyth constituency, the Northern Region and other areas of the country; and if he will make a statement.

Mr. Dudley Smith: Altogether Community Industry has undertaken 197 projects including 86 in Northern Region and one in the Blyth constituency. I recently


announced the Government's decision to increase the support for the Community Industry Scheme.

Mr. Milne: Is the Minister aware that this is a welcome development and that even further expansion is needed—not that we are ungrateful for the increased support that has been made available? Will he consider linking this scheme with the Government training centres? If the excellent training facilities given by Community Industry are passed on to the Government training centres this will help to combat youth unemployment in the region, which is one of our main problems.

Mr. Smith: I am grateful for what the hon. Gentleman says and I shall be happy to look at his suggestion. The scheme was never seen as a means of combating unemployment, important as that is. The scheme is a means of assisting individual young people with special employment problems. It is doing good work, and the increase is generous and realistic. I am glad that the increased support has been welcomed by those who have organised the scheme, including the director who has written in favourable terms to my right hon. Friend.

Mr. Charles Morrison: I congratulate my hon. Friend on increasing the support to enable Community Industry to provide more than three times its existing number of places. Will he undertake to look sympathetically at any request that might come from the organisers of Community Industry if it is able to provide work opportunities for even more than the 2,000 places already provided?

Mr. Smith: Yes, Sir. This matter will be kept constantly under review. We shall see how it goes. The initial scheme was a pilot one, we are satisfied that it is working well and this is a further expansion. We shall certainly look at it again in due course. In addition we shall look at the areas which have expressed interest in the scheme and are prepared to undertake it. About 40 local authorities have recently been in touch with us about it.

Industrial Disputes

Mr. Hardy: asked the Secretary of State for Employment what was the total number of working days lost through

industrial disputes in the five years 1st January 1965 to 31st December 1969 and the number of days so lost in 1972.

Mr. Maurice Macmillan: The figures are 19·6 million and 23·9 million respectively.

Mr. Hardy: Does not that huge, fivefold increase suggest that the Conservative promise of a sovereign remedy in 1970 has proved to be merely an aggravation of a problem which the Conservative Party grossly distorted in the period up to 1970?

Mr. Macmillan: As the hon. Gentleman knows, the 1972 figures have been distorted by stoppages in the coal, building and docks industries. The number of stoppages has been accepted by successive Governments as being an equally important indicator, and the annual average number of stoppages in the two complete years of the present Government is slightly less than the average annual number of stoppages over the five complete years of the previous Labour Government.

Mr. Redmond: Was not 1972 the worst year in terms of days lost through strikes since 1926? Is not that hardly surprising in view of the fact that 1926 was the last occasion before 1972 when we had to decide who governed the country—Parliament or the trade unions?

Mr. Macmillan: If my hon. Friend is saying that in 1926 and in 1972 we suffered coal strikes, that is certainly so, but the strikes in the building and docks industries contributed to the exceptional difficulties in 1972.

Mr. Harold Walker: The right hon. Gentleman said that the number of strikes was as significant as the number of days lost. Is he aware that his predecessor stressed repeatedly to the House that it was of much greater significance that the number of strikes should be reduced? Contrary to the presentation which the right hon. Gentleman has given to the House, in 1972 the number of disputes was greater than the average for the whole of the period of the Labour Government and significantly higher than in four of the years of the Labour Government.

Mr. Macmillan: The number of stoppages in 1972 was very much lower than the number in 1970, and the average annual number of stoppages in the five years of Labour government was slightly more than the average annual number of stoppages in the two complete years of Tory government.

Employment and Training Bill

Miss Joan Hall: asked the Secretary of State for Employment whether he can now say when he expects to publish the Employment and Training Bill.

Mr. Sutcliffe: asked the Secretary of State for Employment when he plans to introduce legislation to implement Government proposals on training.

Mr. Dempsey: asked the Secretary of State for Employment if he can now give an approximate date when he expects to publish the Employment and Training Bill.

Mr. Maurice Macmillan: The Bill will be presented this week.

Miss Hall: I am delighted to hear that. The consultative document was published a long time ago and the situation has become embarrassing to a number of us who are involved in training. I am grateful to my right hon. Friend for getting rid of the embarrassment.

Mr. Macmillan: I apologise for having embarrassed my hon. Friend and I am glad to be able to relieve her of her embarrassment.

Mr. Marks: Is the right hon. Gentleman aware of the considerable concern in the youth employment service at the delay in introducing the Bill? Will responsibility for youth employment be with local education authorities or with the Government, and what implications will the Bill have on the Bill dealing with local government finance? Who will pay?

Mr. Macmillan: I ask the hon. Gentleman to await the White Paper or other explanatory document which it is intended to publish at about the same time as the Bill and which will explain how the youth employment service is to be treated. The object is to allow young people to retain the facility of using the full employment services while maintaining the local

authority special services for young people and school leavers.

Mr. Sutcliffe: Will my right hon. Friend say in advance whether the object of the Bill is to provide more adequate training courses for school leavers than the present skills appreciation courses which are inadequate to their needs?

Mr. Macmillan: This will become clearer on publication of the Bill. The basic purpose of the Bill is to set up a Manpower Services Commission to operate the training services agency and in due course the employment services agency. It is primarily a Bill to deal not with the levels of training but rather with the methods.

Mr. Dempsey: Is the right hon. Gentleman aware that the delay in presenting the Bill has created a regrettable element of uncertainty for the future of those training establishments? Does he realise that it has not been possible to plan instructions, especially for first-year apprentices? Will the right hon. Gentleman give the matter urgent attention in the legislative programme ahead?

Mr. Macmillan: I am aware that there have been uncertainties in some areas as a result of the length of time required for consultations in trying to prepare the Bill. It is a fairly considerable departure. A new effort is being made, with the help, advice and approval of both sides of industry, to set up a manpower services commission representative of industry to control the training services agency and the employment services agency. It is not a minor measure. It has been necessary to think it right through to the end before proceeding with it.

Safety and Health

Mr. Skeet: asked the Secretary of State for Employment what progress has now been made in consultations on the Robens Report on Safety and Health at Work; and whether he can say when he proposes to introduce legislation.

Mr. Dudley Smith: We have obtained general reactions from nearly 100 non-Government organisations; discussion of particular aspects is continuing both within and outside Government. My right hon. Friend hopes to introduce legislation in the 1973–74 Session.

Mr. Skeet: I was hoping that my hon. Friend would say it was to be next week. Is he aware that the report was presented about nine months ago and that there has been ample opportunity to consult the hundred different organisations? Will my hon. Friend indicate where the shoe is pinching? Is it on the unified inspectorate or on the voluntary approach?

Mr. Smith: The proposals are very wide-ranging and raise a number of complicated issues. In undertaking a measure of comprehensive reform of this type it is essential to get the basic decisions right. As I have said, my right hon. Friend hopes to introduce legislation next Session. I think that that is reasonable in the circumstances.

Mr. Heffer: Where there are existing regulations, for example the building regulations, is it proposed that they should continue in force or are the Government discussing the idea of unifying regulations of this type in general regulations throughout industry?

Mr. Smith: A whole range of regulations is being discussed from the point of view of unification. The object is to promote a more self-regulating system of health and safety at work. This has to be worked out in consultation, and it is very important to get the right advice from those concerned. It is important to have a strong back-up of powerful sanctions. Provided we have those, I believe that no one need worry that the new regulations will not do better than the old ones.

Mr. Simeons: Will my hon. Friend comment on the division between the duties of factory inspectors and those of alkali inspectors and say whether the division makes the job of controlling emissions more difficult?

Mr. Smith: There is a very distinct division at the moment. It is far from clear in the public mind on occasions which authority is responsible. It is one of the difficulties to which the Robens Report drew attention and one that the Government are currently considering. It is a matter of some importance.

Mr. Harold Walker: Does the hon. Gentleman recall that every measure put

forward by the Labour Government for two years was resisted by the then Opposition because, it was said, we were waiting for Robens? Are we now to wait two years for Macmillan, as appears to be the case? May we have an assurance that before the Government commit themselves to any final policy on this matter they will include this House in their consultations?

Mr. Smith: The hon. Gentleman knows that that is not a matter for me. It is one for my right hon. Friend the Leader of the House. But how right we were to resist legislation proposed by the Labour Government in view of Robens. The report is extremely comprehensive. The fact that there is a delay of a Session is not unrealistic in the circumstances. This will be a major piece of legislation and we have to get it right if it is to be effective.

Cost of Living

Mr. Carter: asked the Secretary of State for Employment, taking the cost of living index at 100 on 18th June 1970, what has been the percentage increase since, based on the General Index of Retail Prices.

Mr. Chichester-Clark: The General Index of Retail Prices rose by 22·4 per cent. between 16th June 1970 and 16th January 1973.

Mr. Carter: is not that answer a savage indictment of a Government which won the General Election on a promise to cut prices "at a stroke"? Does not the hon. Gentleman agree that in areas of high unemployment and low wages such as Lincoln, Dundee and Chester-le-Street, people's standard of living has been eroded at a far faster rate than in many other areas?

Mr. Chichester-Clark: I thought that this Question might not be unconnected with by-electioneering, which would be better done on the hustings than in this House. However, I recall that a member of the Labour Cabinet at the time of the last election has told us that, seeing the growing shadows of things to come, his right hon. and hon. Friends ran away from rising prices.

Mr. Scott-Hopkins: Can my hon. Friend say what has been the rise in the


level of earnings over the period referred to in the Question?

Mr. Chichester-Clark: The increase in earnings over that period was 34 per cent.

Vacancies

Mr. David Mitchell: asked the Secretary of State for the latest estimate proportion of job his Department.

Mr. Dudley Smith: Accurate information about total job vacancies is not available. The best estimate is that about 25 per cent. of total annual job changes are being notified to my Department's employment services.

Mr. Mitchell: Does not that suggest that there are more than 800,000 jobs now available nationally and that in the South-East alone there are 400,000 vacancies for 139,000 unemployed people? Will my hon. Friend comment on that and on the growing number of acute shortages in a number of trades, especially certain skills? Does not that suggest that there is need now for greater priority to be given to retraining than to general Government measures to reduce the level of unemployment?

Mr. Smith: There is a great need for retraining. We have recognised this and tried to supplement it. There are big regional imbalances of labour shortage. It is a problem that we have always recognised and tried to tackle. It is a question of matching, and I hope and believe that the modernisation of the employment service now being undertaken will result in a better supply of vacancies coming through as a result of more sophisticated matching. Again these matters are not achieved overnight, but progress is being made.

Mr. Thomas Cox: Surely the problem of attendance at retraining centres on the rates of pay being paid to those undergoing retraining, quite apart from the cost of travelling to training centres, is a great deterrent. When will the hon. Gentleman look at these two specific problems?

Mr. Smith: We look continually at the costs involved. I remind the hon. Gentleman that those who are training receive about £5 over and above

unemployment benefit. I am glad that there has been a resurgence of applicants for training throughout the country. One of the big difficulties spotlighted by this Question is that there are often a large number of vacancies in some parts of the country but considerable unemployment in other parts and it is difficult to match the two. We are doing what we can about it.

Sir P. Bryan: Will my hon. Friend comment on the demand for retraining? Is it increasing? Are there long waiting lists?

Mr. Smith: There is a considerable demand and, as my hon. Friend will recall from his days at the Department, there are quite long waiting lists. Again this is a matter that we are trying to iron out so that people's enthusiasm is not diminished and that they can get to a training centre within a reasonable period of time.

Mr. William Hannan: Is the hon. Gentleman aware that some of us take his point about the regional imbalances? Is not the answer that whereas in the North, especially in Glasgow, there are 10 boys running after one job, in London and the South-East there are two jobs for every unemployed boy? What does he intend to do about it?

Mr. Smith: The hon. Gentleman is right to say that there is this disparity. The Government have done a tremendous amount by their regional policies and their introduction of extra industry in these difficult areas. Considerable progress has been made but it takes time, as we said when we came to office and we faced a high and rising rate of unemployment. We are tackling this, and the unemployment figures generally are coming down substantially.

North Sea Oil

Mr. Douglas: asked the Secretary of State for Employment what discussions he has had with trade unions regarding the terms and conditions of employment of workers on oil rigs and production platforms on the North Sea.

Mr. Dudley Smith: My Department has not received any requests from trade unions for such discussions.

Mr. Douglas: Is the hon. Gentleman aware that there is considerable disquiet among trade unionists, particularly in Scotland, about the difficulties of obtaining adequate conditions for many of those employed on production drilling rigs? Will he undertake to discuss with the companies concerned how trade unions can get the opportunity of ensuring membership of trade unions of the people undertaking work on these production platforms?

Mr. Smith: My Department's manpower advisers are always ready to discuss problems of industrial relations, particularly if they are brought to their attention. Trade union recognition and attendant problems are matters primarily for the employees, trade unions and employers concerned. However, if they wish to get together and want advice we are only too ready to help.

Construction Industry Training Board

Mr. Robert Taylor: asked the Secretary of State for Employment what was the approximate state of indebtedness of the Construction Industry Training Board at 1st February 1973.

Mr. Chichester-Clark: On 1st February 1973 £2,144,000 was outstanding against the loan of £8 million made by the Department to the board following an early repayment of £3 million in January 1973. I am pleased to say that the outstanding amount has been repaid since then and the debt is now cleared.

Mr. Taylor: I welcome that improvement in the cash flow, as forecast in the annual accounts. Is not this training board unique among industrial training boards in that the auditors found it necessary in the last annual accounts to point out that no allowance had been made for the grant due to be paid out of levy income? Will my hon. Friend instruct the board for the year ended 31st March 1973 to make clear the amount of grant which is due to be paid out of the levy income that is collected?

Mr. Chichester-Clark: My hon. Friend is incorrect in thinking that there is anything unusual about the way the accounts have been audited. He is assuming that grants to be paid out following the end of the board's financial year have to be

funded from a levy already collected. This is not so. They are funded from a subsequent levy. My hon. Friend will find that the system is similar with other boards—from recollection, the Chemical Industry Training Board, the Petroleum Industry Training Board and the Ceramics Industry Training Board.

Mr. Heffer: Is not one of the problems that, because of the growth of labour-only subcontracting, there has been failure to collect the levy from about one-third of those involved in the industry? This is an absolute scandal. Should not part of the Government's policy be to tackle this question to overcome the problem, for example, of future apprentices coming into the industry?

Mr. Chichester-Clark: All these matters are taken into consideration. I am aware of the hon. Gentleman's particular interest in the matter which, as he said in the House recently, follows my interest. We must take all these matters into account, but they are not, as he knows, easy problems to tackle.

Mr. Idris Owen: Is my hon. Friend aware that there is a critical shortage of skilled labour in the construction industry, particularly in the stress areas? Is he also aware that as a result of that shortage labour is costing a considerable amount? May I ask him not to countenance any attempt to discourage a massive increase in training for skilled tradesmen in the construction industry?

Mr. Chichester-Clark: The answer is an emphatic "Yes, I agree."

Picketing

Mr. Arthur Jones: asked the Secretary of State for Employment whether he has received any further approaches from the Trades Union Congress with regard to reviewing the law of picketing and drawing up a code of picketing practice.

Mr. Maurice Macmillan: No, Sir.

Mr. Jones: Is my right hon. Friend satisfied that the TUC and the unions in membership are prepared to co-operate in ensuring that there shall not be intimidation on the picket line?

Mr. Macmillan: Mr. Victor Feather, the General Secretary of the Trades Union Congress, has made it perfectly plain that


he is against all forms of violence and intimidation on the picket line and the joining of the picket line by unauthorised persons. I am prepared to consider any suggestions which the TUC may care to make on the subject. I think that a voluntary code of practice issued with the authority of the TUC could be very useful.

Mr. Arthur Lewis: As we have a unique situation today with many thousands of civil servants on strike for the first time in our history, will the right hon. Gentleman consult the Civil Service unions today? Perhaps they could give him some idea of how this matter could be resolved and also discuss their wage problems.

Mr. Macmillan: Such evidence as I have seen of the picketing which has been going on today shows that it has been entirely peaceful.

Sir F. Bennett: My right hon. Friend said that he had not received any representations from the TUC. Has he received any representations to expedite the review of picketing which the Government are carrying out?

Mr. Macmillan: We are considering a review of the law. The major problem is not so much the adequacy of the law, particularly the criminal law—as my right hon. Friend the Home Secretary made clear in a speech at Dulwich on the 13th of this month, the ordinary criminal law is not suspended on the picket line, and I do not think that has been disputed—as the question of enforcement. We are considering whether anything can be done to explain the law more clearly to those concerned.

Mr. Eadie: Does the right hon. Gentleman agree that it would assist him in any discussions with the TUC if he put forward a code of practice for Prime Ministers when we recall that on 13th August 1966 his right hon. Friend the present Prime Minister said:
The power to break agreements already made is particularly objectionable, and is in sharp contrast to the policies followed by the Conservative Government in the past"?

Mr. Macmillan: What the hon. Gentleman has read out is totally irrelevant to the Question. I am perfectly certain that neither he nor any right hon. or hon. Member on either side of the House would in any way wish to suggest that

the trade union movement as a whole approved of violence, intimidation or breach of the criminal law on picketing.

Sir Harmar Nicholls: In view of all that is happening in this respect, could not the Government forgo their normal fundamental philosophy and think in terms of nationalising the trade union movement?

Mr. Macmillan: That would give rise to some interesting problems and considerations.

Mr. Prentice: Will the right hon. Gentleman confirm that, to his knowledge, there is no complaint against picketing in the gas dispute or in any other current dispute? Is it not important that we get this matter in perspective: that whereas on the one hand we would all condemn the rare occasions on which violence or intimidation was used, on the other hand we should all condemn those members of the Conservative Party who use it as an excuse for union bashing?

Mr. Macmillan: I think that the greater part of that supplementary question by the right hon. Gentleman was less that generous. There is genuine concern not only among right hon. and hon. Members on this side of the House but in the country as a whole, not least among trade unionists, at some manifestations in the past of violence and intimidation which we cannot deny have taken place. I am happy to confirm that, as far as I am aware, in the current gas industry dispute there has been no question of anything of that sort.

Apprenticeships

Mr. James Hamilton: asked the Secretary of State for Employment what were the number of school leavers who were granted apprenticeships in the engineering industry in Scotland in the years 1969, 1970, 1971, 1972 and 1973 to the latest available date.

Mr. Chichester-Clark: In Scotland in 1969, 1970, 1971 and 1972 respectively, 2,061, 1,863, 1,500 and 1.344 young people under 18 entered apprenticeships in the enginering industry as their first jobs on leaving full-time education. Figures for January 1973 are not yet available.

Mr. Hamilton: Is the hon. Gentleman aware that the number of apprentices entering the engineering industry has shown a marked depreciation? Is he also aware that some very large companies in Scotland have not employed apprentices for over three years? Are the Government prepared to carry out an inquiry and, if my information is correct, try to encourage these industrialists to employ young people as apprentices?

Mr. Chichester-Clark: I made an inquiry about a particular large firm in the hon. Gentleman's constituency within the last few days. It is true that it has not been taking on apprentices but the apprentice school is still open. The engineering industry was particularly affected by the decline in economic and industrial activity in latter years. As a result, there has been a sharp fall in the number of apprentices. We have taken action in other spheres, notably in sharing with the industrial training boards the costs of apprenticeship places and so on, to contribute towards the maintenance of an adequate future supply of trained craftsmen. There are other methods which apply particularly to Scotland as an assisted area.

Mr. Thomas Cox: asked the Secretary of State for Employment what discussions he has had with the Confederation of British Industry in an effort to increase apprenticeships for school leavers.

Mr. Chichester-Clark: The Confederation of British Industry has been fully consulted about the plans for the future of industrial training, including apprenticeship training, which were announced by my right hon. Friend on 8th August and 22nd November 1972. It is also represented on the National Youth Employment Council which keeps opportunities for school leavers under regular review.

Mr. Cox: Notwithstanding that reply, is not the Minister aware that, despite repeated promises in the House, the opportunities for young people to enter apprenticeships continue to decrease? Is he further aware that in London, for instance, we now have one of the highest weekly redundancy figures for any region of the country and a continuous decrease in apprenticeship opportunities? When

will he discuss with hon. Members constructive opportunities for young people to enter worthwhile apprenticeships?

Mr. Chichester-Clark: I should have thought that there would be a good deal of opportunity to do that with the introduction of the Bill which my right hon. Friend announced today—and I am very glad that he did. As for London, 27·9 per cent. of boys entering employment in 1972 went into apprenticeship as against 38·7 per cent. in Great Britain as a whole. The level, however, is counterbalanced by a higher entry of clerical employment and employment of other kinds with planned training.

Miss Joan Hall: In his talks with the CBI and the TUC, what discussions has my hon. Friend had about increasing the opportunities for girls in apprenticeships, since the position at the moment is very bad?

Mr. Chichester-Clark: The number of girls entering apprenticeships has increased steadily from 16,000 in 1970 to 18,000 in 1972. So that is a rather better story.

Building Industry

Mr. Charles R. Morris: asked the Secretary of State for Employment whether he will initiate action to encourage building employers in the Manchester area to recruit more indentured apprentices.

Mr. Chichester-Clark: The recruitment of building apprentices is primarily a matter for the employers, in co-operation with the Construction Industry Training Board. My Department is at present meeting half the cost of the construction board scheme for initial training of boys unable to secure apprenticeships immediately, and also makes grants to building employers in the Manchester area who take on more apprentices.

Mr. Morris: Is the Minister of State aware that many young boys in my constituency want to pursue careers in the building industry but feel that private builders and employers are letting down young people by encouraging lump labour, so that the requisite number of indentured apprentices is simply not available? Will he do something about this?

Mr. Chichester-Clark: We have already discussed to some extent today the question of lump labour and the difficulties involved in dealing with it. I understand that the Construction Industry Training, Board is considering the possibility of introducing a scheme on a larger scale to encourage building employers to take on more apprentices. I very much welcome that.

Mr. Marks: Will the Minister congratulate the Manchester Corporation direct works department on its commitment to 500 building trade indentured apprentices? Will he urge private employers to have as large a proportion of apprentices to other workers as the direct works department has?

Mr. Chichester-Clark: I hope that everyone concerned will try to increase the number of apprentices. What I know is that the building industry in Manchester and the country as a whole is recovering from the low levels of 1971, which followed the depression in which the party opposite left the building industry.

ECONOMIC POLICY (PRIME MINISTER'S SPEECH)

Mr. Meacher: asked the Prime Minister if he will place in the Library a copy of his public speech to the Conservative local government conference on 10th February on the economy.

Mr. Redmond: asked the Prime Minister if he will place in the Library a copy of his public speech on Saturday 10th February to the Conservative local government conference at Westminster on the subject of rates.

Mr. Skinner: asked the Prime Minister if he will place in the Library a copy of his public speech made on 10th February to the Conservative local government conference in London on the economy.

Mr. Norman Lamont: asked the Prime Minister whether he will place in the Library a copy of his public speech to the Conservative local government conference on 10th February on the economy.

Mr. Carter: asked the Prime Minister if he will place in the Library a copy of the speech he made on 10th

February 1973 to the Conservative local government conference on the economy.

Mr. Adley: asked the Prime Minister if he will place in the Library a copy of his public speech to the Conservative local government conference in London on 10th February on the economy.

The Prime Minister (Mr. Edward Heath): I did so on 12th February, Sir.

Mr. Meacher: Since in that speech the Prime Minister said, in his own words, that he wanted the lower-paid to be helped more than those at the top of the scale, why is he cutting back the gasmen to an extra £2·25 a week when, in a month, he will award to those on his own pay level an extra £6 a week in surtax reductions, an extra £5 a week in phase 2 and an extra £3·50 a week in reduced tax on unearned income? Why do people like him need six times the increase of the gasmen?

The Prime Minister: The hon. Gentleman knows perfectly well the arrangements for phase 2. These were confirmed in detail yesterday in the Green Paper. As for the changes in taxation, they were dealt with in the last Budget.

Mr. Redmond: When my right hon. Friend made that speech, he referred to the rates. In any discussions that he has on rates, will lie remember that we must not cloud the responsibilities of local councillors to their electors? Has he seen a report in last night's Bolton Evening News which shows that the Bolton rate is going up by the highest figure for 10 years under Labour control, whereas Tory councillors are even now keeping things on an even keel?

The Prime Minister: It is desirable that ratepayers should see the extent to which their rating assessment is being changed as a result of revaluation and the allocation of the actual rate poundage as between different items, for most of which local authorities are responsible, and no doubt they will compare one local authority with another.

Mr. Skinner: When the Prime Minister talked to the local government conference about monitoring public spending, why did he not point out that he himself was having a £40,000 heated indoor swimming pool built at Chequers? Is not that a


luxury item? What is the Prime Minister's new slogan—"Come bathe with me and beat the freeze"?

The Prime Minister: The Trustees of the Chequers Trust accepted a present, which involved no public expenditure, in order to commemorate the two visits of President Nixon to Chequers—once under my predecessor and once when I was there —and his meeting with the Queen.

Mr. Lamont: On the subject of incomes policy mentioned in his speech, has my right hon. Friend seen the report in the Glasgow Herald of 26th February of a meeting of gasmen addressed by the Leader of the Opposition at which he said that the gasmen were not breaking the law and could depend on Labour's backing? Does not this show that the so-called peace plan put forward by the Leader of the Opposition is simply a twice-weekly charade in this House?

The Prime Minister: I read the report by the political correspondent of the Glasgow Herald. I have no means of judging its accuracy. No doubt the right hon. Gentleman has. He said, I see:
Both in its content and its total impact, Mr. Wilson's speech was inflammatory and not designed to placate.
It is interesting that that speech was made after he had written to me but before he had received my reply.

Mr. Carter: When the right hon. Gentleman wrote to the Civil Service staff side in 1966, deploring the Labour Government's wage control policies, he no doubt wrote sincerely, but in the light of his own experience would he not agree that that letter was unwise?

The Prime Minister: No. Perhaps I can draw attention, not only for the House but for all civil servants and for people outside, to the letter which was sent to the staff side which I have already quoted once in the House and which was designed to deal specifically with an occasion of this kind. I can read it again. It says:
Subject to any requirements of an overriding national policy of general application the Government intends to continue to reacts and implement settlements on the basis of surveys by the pay research unit.
There can be no doubt, whatever anyone has said about the Government's policy on pay and prices, that it is an overriding

national policy and this was given to the staff side at the beginning of 1971.

Mr. Adley: Is it not clear that everybody in the country, or almost everybody, recognises the danger of inflation? Would my right hon. Friend agree that it appears that the Labour Party either has capitulated or is about to capitulate totally to the wishes of the militant trade unions and that this can do nothing whatever to cure inflation?

The Prime Minister: I do not believe that a policy which says that the whole of the price structure should be controlled and that there should be absolutely no control of wages is a viable policy. What is more, the trade union leaders themselves know that it is not a viable policy.

Mr. Harold Wilson: Since the Prime Minister invited me to intervene, if he will read all the reports of that speech—[Interruption.]—including that in The Times, he will see that I spoke entirely within the terms of the letter which I wrote to him and which he so foolishly rejected. Reverting, however, to the speech which was the subject of the Question, which was the Prime Minister's speech, can the right hon. Gentleman now vary the answer he gave me before Christmas about interest rates? In view of the almost weekly leapfrogging between clearing bank base rates and the interbank market dealings, against the background of a £4,000 million Government borrowing requirement and a demoralised gilt-edged market, in view of the inevitable consequences—[HON. MEMBERS: "Too long.")—for mortgage rates, which Conservative Members made so much of in the last election, will he now vary that answer and take interest rates in control?

The Prime Minister: As I told the right hon. Gentleman before, we take the same view as his administration: that interest rates are part of the means of securing an expansion or otherwise of the economy. If interest rates are to be used in that manner, obviously they cannot be controlled. What we have done is to deal with this under the allowances when people are calculating their costs, and I believe that to be the right approach. But if the right hon. Gentleman is saying that his speech, to which allusion has been made, was entirely in the terms of the letter lie wrote to me, it is strange that


the conclusion should have been drawn that
unwittingly he undermined his own peacemaking role by characterising it as nothing more than a trap".

Mr. Wilson: It was not a trap, although the right hon. Gentleman has created one for himself on that basis. But on the question of interest rates, does not the Prime Minister realise that, while any Government must be free to use purposive interest rates and other monetary policy, since the setting up of this free market in the City for interest rates the Government can now no longer control interest rates? They are out of their control. There is no bank rate and because of the £4,000 million Government borrowing requirement and the gilt-edged market, is it not a fact that there is no monetary policy at all—except one of steadily rising interest rates which are inflationary?

The Prime Minister: I cannot possibly agree with the right hon. Gentleman. He must have misunderstood the position. There never was a control of interest rates concerning money rates in this country under his administration. Obviously interest rates are interlocking with the demand for money and the demand created by overseas interest rates as well. I remember the right hon. Gentleman, when he was Prime Minister, on many occasions delivering a lecture on this matter to the House.

NORTHERN IRELAND

Mr. Orme: asked the Prime Minister if he will make an official visit to Londonderry, Northern Ireland.

The Prime Minister: I have at present no plans for a further visit to Londonderry.

Mr. Orme: If the Prime Minister visits Northern Ireland, and particularly Londonderry, will he make a speech in which he makes a clear distinction between industrial action in this country and terrorist action in Northern Ireland or from whichever quarter it comes? In that regard will he repudiate the statement by his right hon. Friend the Secretary of State for Northern Ireland at Penrith on Sunday and tell the House clearly whether or not that speech represented Government policy?

The Prime Minister: What my right hon. Friend was saying in his speech was a very straightforward point: that his responsibility in Northern Ireland was to try to prevent people from being oppressed by force. It is the responsibility of the Government to protect the weak members of the community, such as the aged and the lower-paid—[Interruption.]—who are being harmed by industrial action.

Mr. Kilfedder: Would it not be the wish of my right hon. Friend that the news media throughout the world, instead of broadcasting wild and false allegations about the security forces which are doing a noble task in Northern Ireland, should expose the murderous terrorism of the IRA and its cowardly callousness, which was sadly demonstrated at the weekend when a 10-year-old boy was murdered while playing in the garden at the back of his home on the Creggan Estate in Londonderry? [Interruption.] This is not a matter for jokes from the Opposition. The young boy accidently triggered off a landmine which had been deliberately placed there by members of the IRA who are totally indifferent to human life.

The Prime Minister: Very full accounts of this terrible incident have appeared in the Press and the House will agree that it was a deplorable incident The Provisional IRA has now acknowledged responsibility for it. What is also deplorable is that the IRA is now attempting to blame the Army for not defusing the bomb before it blew up the young lad when in fact the bomb was intended to blow up the Army. The whole House will agree about the terrible nature of the incident.

Mr. Merlyn Rees: In view of what the hon. Member for Down, North (Mr. Kilfedder) has said in his supplementary question about the terrible incident in Londonderry, was it not a mistake to equate the action of terrorists with the action of people going about their business of industrial action?

The Prime Minister: I must correct the hon. Member. My right hon. Friend was not equating terrorists with—[HON. MEMBERS: "Yes, he was."] I would ask the House to read the text of the speech which my right hon. Friend—

Mr. Raphael Tuck: It looks jolly like it.

The Prime Minister: The hon. Gentleman says it looks jolly like it but perhaps he will read the full text and he will see that this is not the case. What my right hon. Friend was saying was that whereas he had responsibilities to see that people were protected in Northern Ireland, so it was also necessary to deal with inflation in order to protect those who suffer from it.

Mr. Duffy: asked the Prime Minister if he is satisfied with the co-ordination between the Secretary of State for Defence and the Secretary of State for Northern Ireland on the private possession of firearms in Northern Ireland.

The Prime Minister: Yes, Sir.

Mr. Duffy: Is the Prime Minister aware that the Secretary of State has indicated that he is considering asking for new powers? Does he not think that the right hon. Gentleman could best demonstrate his good intentions by showing to the people on the Unionist side henceforth that they will be treated exactly the same as people on the anti-Unionist side, and that this is nowhere more urgent than in the private possession of firearms? Will he therefore urge upon his right hon. Friend the need for the revocation of all licences, their issue on the most selective basis, mandatory sentences for those in illegal possession and, finally, impartial spot checks?

The Prime Minister: My right hon. Friend has been ensuring that both sides are treated alike. It cannot have escaped the notice of the hon. Gentleman that my right hon. Friend was violently criticised from the Protestant quarter for the firm and stern action which he and the GOC has taken. In fairness to him, that should be acknowledged. My right hon. Friend has already told the House that he will be taking further action about the control of arms. It will be taken under urgent procedure by Order in Council and will be taken in the near future.

Mr. Biggs-Davison: Can my right hon. Friend tell me, or can the Secretary of State for the Home Department tell him, whether the firearm which Miss Mary McGuire, a defector from the Provisional IRA, has told the Press she has carried and continues to carry is licensed?

The Prime Minister: Without notice I could not answer my hon. Friend's question. I shall endeavour to write to him.

Mr. Harold Wilson: Will the right hon. Gentleman spell out a bit further his reference to the Secretary of State's intentions about action under an Order in Council, which I do not believe is fully understood by the House?
Secondly, as we are approaching in a few weeks' time the second anniversary of the date on which the Labour Party demanded action about the private ownership of licensed arms, does the right hon. Gentleman realise that the whole issue is that if all of them are made illegal, except those that are very strictly reissued, there can be spot checks which are not invidious as between one religious community and another, and all of them over a period can be called in because of what we have suggested—namely, mandatory sentences for anyone holding arms, which would then be illegal?

The Prime Minister: The Order in Council, which my right hon. Friend will present, will include powers to require that hand guns licensed for personal protection should be brought in for ballistic or any other necessary test. It will also include powers to revoke licences in certain circumstances and to restrict further the numbers of licensed firearm dealers. I think that this will cover quite a considerable amount of the ground which the Leader of the Opposition has often emphasised in the past.

Mr. McNamara: While we accept what the Prime Minister has said although we do not regard it as going far enough, may I point out to his right hon. Friend the Secretary of State for the Home Department, and also to him that half the trouble that arose in Northern Ireland was because moderate men were not listened to when they voiced legitimate grievances about the situation in Northern Ireland and, therefore, the situation was driven into the hands of the extremists? Would it not be a good idea if the Secretary of State for Northern Ireland, instead of drawing parallels from the situation in Northern Ireland and trying to equate British trade unionists with that situation, looked more carefully at the situation in Northern Ireland and said "This is what can happen if moderate


and reasonable men with reasonable ideas for the future well-being of their country are not listened to"?

The Prime Minister: I have already explained my right hon. Friend's speech. The whole House respected my right hon. Friend the Secretary of State for Northern Ireland for the way in which he listened to the moderate men. On my last visit to Northern Ireland I was criticised for flatly refusing to meet those whom I regarded as extremists.

WALTHAM FOREST

Mr. Tebbit: asked the Prime Minister if he will pay an official visit to the London borough of Waltham Forest.

The Prime Minister: I have at present no plans to do so, Sir.

Mr. Tebbit: Is my right hon. Friend aware that his answer is a disappointment to me because I had hoped that if he had visited that borough he would have spoken to the leaders of the Labour-controlled council to ask them why their rates are soaring while those of the Tory GLC are held down, and also to make the point to them that they should not come as supplicants for Government money while they refuse to take notice of the Government's request that they should sell council houses to tenants who wish to buy them?

The Prime Minister: I think that my hon. Friend has made his point admirably without my paying a visit to his constituency. I support his view that local authorities should sell council houses and I can confirm that more and more local authorities have been doing so during the past year.

NEW TOWNS (INITIATION) BILL

3.35 p.m.

Mr. John Farr: I beg to move,
That leave be given to bring in a Bill to confine the initiating of new town projects to public development companies acting on Government authority.
The Bill has been brought about by an example in my constituency in Southern Leicestershire, at a village called Catthorpe, about three years ago.

Mr. Speaker: Order. I ask right hon. and hon. Members to withdraw quietly.

Mr. Farr: About three years ago a block of about 800 acres of land at Catthorpe was acquired by a developing company called Webco for the purpose of obtaining permission to build a new town. An ordinary agricultural price was paid for the land, which is in a remote part of the county, with no normal development value, as it is some miles away from the nearest town.
Not unnaturally, all the local planning authorities turned down the scheme. The greater part of the development is in Leicestershire, but part of the proposed new town will be in Warwickshire and Northamptonshire. The three local planning authorities turned down the scheme to build a new town in this remote part of the country as it was an unsuitable site. Webco, the proposed developer, has appealed and the matter is now going through the normal planning procedure.
I shall not go into the merits of this application. My concern is for the suffering and distress of my constituents who live in and around the little village of Catthorpe. They do not know from one day to another what their future is to be. It is impossible for them to settle down and live their normal lives when at any moment they might be swamped by homes for up to 15,000 people which will be built around them. They have no security in maintaining and repairing their houses. Further, there is no security for those who work on the land in this area.
Moreover—and here I come to the purpose of my Bill—there is nothing to

prevent them remaining in this position more or less indefinitely. WEBCO can see the prospect of changing a purchase of 800 acres at £400 an acre into an investment worth £10,000 an acre. With that substantial profit in mind there is no shadow of doubt that it is likely to make repeated applications. A succession of public inquiries are likely to be held unless consent is forthcoming.
The Bill endeavours in the public interest to lay down guide lines for developments of this nature by speculators. WEBCO has said that, if it is successful, this pilot effort will be the forerunner of repeated applications for new towns throughout the country.
New town projects of this size are too big and have too great a social consequence on the rest of the country. With the limited land that we have available, haphazard applications should no longer be left to speculative developers like WEBCO.
The Bill will provide a regulatory framework. It will require such developers, before proceeding through the normal planning channels, to approach a regional economic planning council to have the whole project vetted by the council. The council will vet the suitability of any project on the basis of national and regional requirements. Until the availability, for example, of employment, sewage services, water services, accessibility by road, lighting, heating, health and educational facilities has been satisfactorily vetted and passed by the regional economic planning council, an applicant will not be authorised to proceed through the normal planning channels.
The Bill will contain a clause to limit planning applications to construct a new town at certain places to once only. When a ministerial refusal has been given, such refusal would remain effective for 20 years. By that means I hope that those who live on speculators' sites will be given some peace. I seek the leave of the House to introduce the Bill.

Question put and agreed o.

Bill ordered to be brought in by Mr. John Farr, Mr. Sydney Chapman, Mr. Charles Morrison, Mr. Alfred Morris, Sir Gerald Nabarro, and Mr. William Price.

NEW TOWNS (INITIATION)

Bill to confine the initiating of new town projects to public development companies acting on Government authority, presented accordingly and read the First time; to be read a Second time on Friday 4th May and to be printed.[Bill 78.]

Orders of the Day — COUNTER-INFLATION BILL

As amended (in the standing committee), considered.

New Clause 1

RESTRICTIONS ON INSURANCE PREMIUMS

'(1) The Secretary of State shall have power to restrict insurance premiums, where the relevant transaction is effected at a time when Part II of this Act is in force.

(2) The powers conferred by subsection (1) above shall be exercisable by order, or by notice given to the insurer, or each of the insurers, affected by the notice.

(3) An order or notice under this section may make provision for the giving of consents by the Secretary of State to the doing of anything otherwise prohibited by the order or notice.

(4) Before making or giving an order or notice under this section (other than one which only removes or lessens a restriction), the Secretary of State shall give 14 days notice to the insurers who would be affected by the order or notice, and shall afford to them an opportunity of making written representations to the Secretary of State.

(5) If, in the case of an order under this section, it appears to the Secretary of State to be impracticable to give notice under subsection (4) above to all the said persons, the Secretary of State may instead publish 14 days notice of his intention to make the order in the Gazette and in such other ways as may be prescribed, and shall afford to all those persons an opportunity of making written representations to the Secretary of State.

(6) Where an order or notice under this section is contravened, the liability for the contravention attaches to the insurer who charges the insurance premium.

(7) An order under this section shall be subject to annulment in pursuance of a resolution of either House of Parliament'.—[Sir G. Howe.]

Brought up, and read the First time.

3.42 p.m.

The Minister for Trade and Consumer Affairs (Sir Geoffrey Howe): I beg to move, That the clause be read a Second time.
This is a clause dealing with insurance matters, and it takes account of the special nature of insurance business. It takes account of the extent to which there is already in existence machinery for the supervision by the Government of insurance companies and their conduct.
As the House knows, the Department of Trade and Industry exercises detailed supervision over insurance companies, under the Insurance Companies Acts, specifically for the purpose of maintaining their solvency. The House will also know that there is an Insurance Companies Bill now under consideration in another place to extend and improve that system of control. That control was established and is exercised because of the overriding importance of the stability and effectiveness of insurance companies not only to policy holders but also to third parties.
In the context of the measure now before the House it has been concluded that it would be inappropriate for the insurance industry to be subject to two supervisory bodies, the Department of Trade and Industry, on the one hand, and the Price Commission, on the other hand. That is because there is a need for decisions about price control to take account of and be consistent with the requirements of solvency. Whereas a manufacturer normally knows his costs when fixing his price, an insurance company can inevitably proceed only on the basis of an estimate of what its claims experience will be.
It is against that background of fact that techniques have been evolved over the years within the Department for assessing future liabilities of insurance companies for the purposes of solvency. Inevitably, in order to carry out that work, experienced staff have been gathered together, staff of a quality and with qualifications which are not easy to find. It would not be fruitful or useful, or in the interests of price control or of the community generally, for that staff to be duplicated or dispersed to the Price Commission as well. In addition, there is available in the Department information about the present position of insurance companies which also makes it sensible to combine both functions in the Department.
Lest any hon Member should think that this change can have or is intended to have the effect of letting off insurance companies with any less stringent policy for price control than is applied to other prices, I can assure him that that would be quite untrue. We, too, in the Department of Trade and Industry will need, like the Price Commission, to receive in-

formation about the current state of any given insurance company. But for the most part we shall have that and be receiving it regularly and automatically. In addition, we shall have the capacity to analyse that information with at least as much expertise and, because of experience, probably more than the Price Commission will have. So against a more informed background the control is likely to be more firm rather than less so.
The House will know that the pattern of control of insurance rates during the standstill has been very firm and tight. It will continue on that basis in accordance with the general rules enunciated in the Green Paper. Insurance companies have been required to absorb cost increases until this stage. From now on they will have to work on an allowable costs basis. Increases in scheduled rates will have to be notified and scrutinised. The only other adjustment that would normally be permitted is an adjustment in relation to bad claims experience or in relation to individual policy holders who have particular insurance claims records which would ordinarily justify a change in their premium. That, inevitably, would have to continue.
It is upon the basis that that is the right and sensible way of handling the control of insurance company pricing during the second stage that I commend the new clause to the House.

Mr. Ray Carter: I want to deal briefly with the alleged stringency which the Minister says will be applied to motor insurance companies in particular.
We note the fact that the responsibilities that the Department of Trade and Industry now has for solvency will be paralleled with fresh responsibilities for premiums. I remind the Minister that the Bill now in another place came into existence largely because the solvency of one company in particular and of many motor insurance companies in general was found to be insufficient, and, moreover, is insufficient now.
Notwithstanding these new powers, if the margins on which companies are operating are insufficient for solvency, will the Minister direct an insurance company that a premium increase should occur in order to maintain sufficient solvency margins? Presumably that is precisely


the intention of the Bill now in another place.
Regarding the new clause, I remind the Minister that whenever motor insurance companies are approached about increases in premiums, they say—they constantly tell this to the Press and the motoring public—that their business is run at a loss. Most accounts of insurance companies show not only a loss now but a loss that has been apparent over many years. That being so, one is entitled to ask precisely why the Government are introducing a new clause to restrict premium increases.
Finally, as the code is not likely to become law for some weeks, if not months, shall not we see a massive attempt on the part of the motor insurance companies to raise their premiums this side of the code coming into force? If that is so, precisely what powers has the Minister to ensure that the accounts are turned to the good, that losses disappear and that any premium increases that are requested in the future will be adequately dealt with by the Government? Prior to the code coming into effect, what powers does the Minister have to deal with those companies that seek unjustifiably to increase premiums?

Mr. Nicholas Ridley: I can well understand the Government's acute dilemma over whether to put the new clause into the Bill. The subject of the control of insurance was not mentioned in Committee, and I am sure that my right hon. and hon. Friends are wondering on which side of the fence to come down. I wonder whether the considerations about which the hon. Member for Birmingham, Northfield (Mr. Carter) has been talking were uppermost in their minds. They are considerations which, I confess, when I was in my right hon. and learned Friend's Department, were in my mind—the question of solvency and of making certain that insurance companies were able to meet any claims which might fall on them. On the other hand, there is the question of premiums which is now before the House.
Which of these two is to predominate? Here there is a direct conflict between two aspects of Government policy—on the one hand, to ensure that insurance companies will not become insolvent and,

on the other hand, to ensure that people are not overcharged for their premiums.
I should have been tempted to omit the new clause unless more convincing evidence of abuse could be brought before the House. The control of insurance rates is not like the control of any other price. When considering the price of shoes, manufactured goods or hairdressing, one is operating on a set of known costs, of which the producer of those commodities or services has experience and which one can ascertain and check.
Insurance operations involve making guesses, although they are guesses based on experience, about what future claims will be. This is less true of life insurance, but it is especially true of motor insurance and of general and accident insurance. In the early 1970s inflation caused motor repairs to rise to such a point that there were considerable losses because insurers had not been able to estimate the extent to which those costs would rise when they took premiums.
It is difficult to know on what basis the Government will exercise control of insurance premiums. I shall be grateful if my right hon. and learned Friend will give more guidance on the considerations which he will have in mind. Let us suppose that insurers decide that because building costs are rising they wish to charge more to insure people's houses. Who will tell them that they are wrong, and on what basis will the decision be made? I believe that this matter should appear in the code. I have seen no reference in the code to the criteria upon which the control of insurance premiums will be carried out. May we be told why there is no reference in the code to the method by which these determinations are to be made?
I am sure that the House will agree that the insurance industry is highly competitive. It was the burden of the Opposition's case at the time of the Vehicle and General affair that the industry was too competitive and that competition had so undermined the level of premiums that companies were not only making losses but were being made bankrupt because they had undercut too much and they were thus unable to meet claims. Fire insurance has been referred as a subject for investigation by the Monopolies Commission and the cosy


arrangement is to be broken up. I am all for this, but certainly the rest of the industry is highly competitive. Therefore, I wonder whether it is necessary to put in front of the Government's obligation to prevent bankruptcies the Government's policy to control prices—particularly when competition in insurance appears to be so effective.
How many people will be needed to control insurance premiums? This new idea about controlling insurance charges has been thought of since the manpower requirement was drafted. Presumably there will now have to be an additional manpower requirement to monitor premiums if an order is made to give this power to the Government. I appreciate that no order has so far been made, but if it is made we shall undoubtedly need a considerable number of extra staff.
This may raise yet another problem. Staff skilled in supervising insurance companies are hard to come by and are in short supply. One of the troubles in the Department of Trade and Industry in the past has been the great difficulty in recruiting sufficient staff with knowledge and expertise of insurance to deal with the many companies whose accounts had to be supervised. If the Government are now to supervise premiums as well, then they will need a great deal more staff.
My worry is that the staff in the Department who deal with insurance companies are so overburdened with the work that is already on their plate, plus the requirements to monitor prices under the freeze, that we shall find that the entire staff of the Insurance Division of the Department is concerned with the monitoring programme rather than with getting on with the job of supervising those insurance companies which might be in financial trouble. Which of these two legs of policy will be more important, control of premiums or control of solvency? I should like an assurance that authorisations of new insurance companies, control of solvency, and all the many supervisory matters contemplated in the insurance legislation now before another place will not be jeopardised by taking staff from those aspects and putting them on to the control of premiums. If there is to be a choice between the one task and the other, I believe the former to be the more important.

Mr. Arthur Lewis: The speech of the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) contained a great deal of truth, particularly towards the end. He should know more than anybody about this subject because he was in the Department when the maladministration and neglect in that Department were so apparent to all concerned. It was not so much the insurance companies that were at fault. It was the hon. Gentleman and his then Department.
My hon. Friend the Member for Birmingham, Northfield (Mr. Carter) will recollect that it took months for us to get answers to letters which we sent to the Department. From what the hon. Member for Cirencester and Tewkesbury said, it would appear as though he and his Department were so overworked that they neglected to do their duty. That probably was the inference contained in the report on the Vehicle and General affair.
Undoubtedly the Department has a great deal on its plate in a number of tasks, and I am wondering whether it will now be in a position to deal with these additional matters from the point of view of the consumer. Whenever I have tried to get in touch with the Department of Trade and Industry I have found that it takes three or four weeks to get a reply merely saying that the matter is being examined. On 23rd December I wrote a letter to the Department about one small price increase. I did not receive a reply until 26th February—and the reply merely informed me that the Minister was referring the matter back to the Camden Borough Council. It has taken virtually three months for the Minister to notify me of what was happening. If this is what happens now, what will happen in future when all this additional work has been loaded on to the Department?
We were told only a month or two ago that any housewife who thought she was being robbed by price increases had only to telephone London. Heaven knows what was supposed to happen if that lady lives in Scotland. We are now being told that there will be a special Department to monitor premiums imposed by insurance companies, to look into solvency matters and all the rest of it, when we cannot even be told in the case of a penny or twopence on a single item, first, who should deal with


the matter, secondly which Department is responsible and, thirdly, and more important, what procedure is to be adopted.
It is well known that insurance premiums among the EEC countries are double the premiums in this country, and in some cases even treble. What will happen when there is harmonisation of insurance premiums within the EEC, a subject on which I understand discussions are now taking place? Will insurance companies be compelled to adopt uniform systems of insurance premiums based on the continental rates? Will the insurance companies come forward and say, "We must treble our premiums, not because we want to do so, or because we need the extra money, and not because we want to make any more profits. Mind you, we do not mind taking a double or treble profit, but this is all being done because we are being controlled by the Common Market"?
Here is my question for the Minister. Does he then say, "Because we have been forced into the Common Market without the full-hearted consent of the public and Parliament, because we find that we are being compelled to double or treble premiums, I am now going to insist that these insurance companies increase their premiums, because you have given me the power under this Bill so to do."
I ask my hon. Friends to watch this very carefully because I think it is an inflationary clause and would have an effect directly opposite to that which the Government prophesy, since it gives the opportunity of doubling or trebling insurance premiums, if desired, on cars in particular and on other items of insurance.

4.0 p.m.

Mr. Nicholas Edwards: In making my remarks, I must first declare an interest. I am a director of an insurance broking firm and a Lloyds underwriting agency and a member of Lloyds.
It seems to me that one or two things need to be said and one or two questions asked about this clause. First, I think we should have it clearly stated by the Government that we are not setting out on a dangerous and slippery slope which we have up to now avoided in this coun-

try—that is, the detailed, permanent long-term control of the rating of insurance premiums. One of the strengths of the insurance industry and its competitive position in the world has been this avoidance of the detailed control which has been applied in many other countries. If we are to accept this clause we must do so only with reluctance and on the basis that it is only for the period for which Part II of this Bill applies.
I am disturbed about the way in which this matter is being dealt with. We have here a new clause, tabled, I believe, last week, and, as my hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) said, not referred to in Committee. Both the hon. Member for Birmingham, Northfield (Mr. Carter) and my hon. Friend the Member for Cirencester and Tewkesbury have referred to the code and have implied that it applies to this clause. This is one point I want clarified. I am not clear as to the status of the code in relation to this clause, where the responsibility is being placed with the Department of Trade and Industry. Does the code in fact apply? Do the guidelines laid down in the code have any relevance to insurance premiums?
We had the briefest possible introduction from my hon. and learned Friend, and here again we have a contrast with other matters provided for in the Bill. For most things, we have the consultative document, which has to be debated and discussed. Representations on it are to be considered. Then it is to be brought before this House again as a White Paper. Here, with the insurance industry, we have a clause on which certain principles have been set out briefly by my right hon. and learned Friend in the House this afternoon, and this is all that we know about the way in which this provision is to be administered. Apparently there is to be no room for consultation, but if there is, may we know from my right hon. and learned Friend this afternoon what form it is to take?
There are a number of specific questions. As far as other business transactions are concerned, we know that exports and matters dealing with overseas trade are excluded. This clause as I read it, contains no such exclusion. Apparently it would be within the power of the Minister to control rates applying to overseas business. This may not be his


intention, but will he tell us the way in which he intends to deal with this matter and the manner in which he intends to define insurance in applying the control which this clause gives him the power to administer?
Again, we have heard from him in his speech this afternoon that action is apparently going to be based upon the information available to his Department—that is, the regular information about the state of insurance companies. Will he, therefore, confine himself to a broad study of the profit margins of insurance in particular fields as they arise from the information that his Department receives, or will he get involved in the detailed control of individual cases?
I am bound to say, as a practising insurance broker, that I am filled with awe at the thought of his attempting to apply the kind of controls that are apparently envisaged. It seems to me that there will be some difficulty for insurance brokers. Having failed to get the terms they wish from the underwriter, they then ring up the Department of Trade and Industry, ask for my right hon. and learned Friend, and say that the underwriter has been unfair and charged too high a rate, and what is he going to do about it. I do not see how, in practice, individual rates can be controlled in this way. Can my right hon. and learned Friend give some guidance to the industry about how it is to carry on its business?
My hon. Friend the Member for Cirencester and Tewkesbury referred to one difficulty—that is that insurance is considering events that are going to happen in the future. I will take two examples. In marine insurance, rates are based on experience in past years, but the repairs frequently take place one, two or three years later when repair costs have risen greatly. In liability insurance, claims are frequently settled five, six or seven years after the event and underwriters are seeking to assess the position for the future in a very rapidly changing world, a world in which the whole scope of law and its application, particularly in the United States, are changing month by month. Are factors of this kind going to be taken into account by the Depart-

ment in telling underwriters that they should not increase premiums?
I think that, if we are to give the Minister the wide and extensive powers contained in this clause, we are entitled to a good deal more information than we have had from my right hon. and learned Friend from the Dispatch Box this afternoon. I believe that we are entitled to at least as much guidance and information as are given on other matters in the price and pay code, which is a consultative document.

Mr. John Biffen: I should like to apologise to my right hon. and learned Friend for not having been here at the beginning of the debate on this new clause. It was an unintentional discourtesy and one which could not be avoided.
My hon. Friend the Member for Pembroke (Mr. Nicholas Edwards) made one observation and his speech contained one characteristic comment which, for those of us who are on the Standing Committee, had a very familiar ring. His observation was that there was nothing like enough information in the Minister's speech and that there did not seem as if there ever would be very much information forthcoming in the debate, but that we should not worry about that because in the best of all possible worlds, either it would be a farce or it would be all right on the night.
His second observation was that, with his working experience, he could not see how on earth the Minister would try to carry out all the things that lay within the ambit of his purported ambition. It might have been my hon. Friend the Member for Brighouse and Spenborough (Mr. Proudfoot) talking about the grocery trade and the ambitions of the Bill as compared with the realities of the retail business as he knew them. It might have been the hon. Member for Salford, West (Mr. Orme) talking about the determination of wage rates on the shop floor when confronted with the ambitions of the legislation and the realities of the commercial and the industrial world.
Therefore, we have begun the Report stage in a manner reminiscent of our Standing Committee, comparing the apparent omniscience of the authors of the Bill and the practical limitations in


the world outside. The unequal and inequitable reconciliation between the purported all-powerfulness of the Government and the known random effect of their legislation will lead to the most destructive and unrelenting opposition to the policies that the Bill embodies.
Like my hon. Friends the Members for Pembroke and Cirencester and Tewkesbury (Mr. Ridley), and, indeed, the hon. Member for West Ham, North (Mr. Arthur Lewis), I have some difficulty in relating the clause to the general character of the Bill. First, exactly what is the notification procedure? Is it merely to be the conventional way in which information reaches my right hon. and learned Friend, with his existing authority and responsibility for the insurance industry in his present departmental capacity, or will notification procedures be sought under Clause 5?
The anxiety expressed by my hon. Friend the Member for Pembroke about the relevance of the code to the clause is understandable. We are led to suppose from the terms of the clause that the Secretary of State is to be the monitoring agent, but the rubric alongside Clause 2 says:
Code for guidance of Agencies.
It does not say that it is a code for the guidance of my right hon. and learned Friend. Therefore, we should like to know exactly how my right hon. and learned Friend seeks to interpret his responsibilities, and above all what is to be the relevance of the code.
We see from paragraph 65 of the code, under the heading "Services", that
In general, paragraphs 7 to 49 of the Code apply to the prices of service enterprises …".
Is insurance, for the purpose of the clause, a service enterprise?
We know—and it cannot be stated too often—that the Price and Pay Code, either as a consultative document or in its final statutory instrument form, has no legal authority in itself. After realising the elaboration of nuances of control contained in the consultative document, many people in industry and commerce must be only too thankful that it does not carry the sanction of law.
4.15 p.m.
On all these points my right hon. and learned Friend will naturally be anxious to assuage the doubts not merely of the professionally informed, such as my hon. Friend the Member for Pembroke but of a wider public. Inevitably, there will be an expectation that my right hon. and learned Friend is some kind of Sir Galahad who will stop the upward thrust of insurance premiums. Therefore, although we do not know by exactly what means notification will be legally required, I predict that there will be an increased flow of postal complaints to Members of Parliament or, perhaps mistakenly, to the agencies, and certainly to the Department direct, asking, "What will you do about proposed increases in insurance premiums?"
I hope that my right hon. and learned Friend will reassure the House that it is not the Government's intention to politicise the insurance industry on the scale on which it has been politicised in many other West European countries and in North America.

Mr. Nicholas Edwards: Hear, hear.

Mr. Biffen: I am glad to have the verbal support of my hon. Friend.
It is with an almost careless rapture that the Treasury Bench now seeks to politicise almost every aspect of industry and commerce. I cannot believe that that is consistent with what I had assumed to be Conservative philosophy, but I leave that on one side, as we do not wish to have a teach-in on Tory philosophy. I doubt also whether it is consistent with good economic practice. One of the virtues we have proudly proclaimed over the past few years—the ability of the City of London to be the commercial centre of the enlarged community—is not likely to be sustained if there is to be a great deal of ministerial interference with the insurance industry.
That there must be a further ministerial presence, we all agree. That is why there is legislation in another place. But much more daunting is the prospect of capricious and random interference in the workings of the insurance industry, as there seems to be in prospect random and capricious interference in the pricing structures of a great deal of British manufacturing industry.
That is the dilemma before the House when it tries to address itself to the almost gargantuan task of making the present policy comprehensive. The arguments that take us into insurance will inevitably take us into food prices and interest rates. I look forward with some anxiety to my right hon. and learned Friend's answers to these arguments.
A great deal of the quality of the control that we may expect to be exercised can be gauged from the additional number of staff that it is proposed shall be engaged for the purpose. There is something about the clause uneasily reminiscent of Clause 10 on rents. We were told in Committee that the Department of the Environment was to have a wide-ranging remit to study the proposed rating policies of local authorities throughout the country. We were unable to discover how many additional civil servants would be hired for that fairly ambitious exercise. The House would like to know from my right hon. and learned Friend how many additional staff he believes it will be necessary to employ to discharge the additional responsibilities that he undertakes under the clause.
In addressing himself to all these points, my right hon. and learned Friend will have to allay at this late stage in the Bill's progress the sort of anxieties expressed by my hon. Friend the Member for Pembroke, which are widely felt in the City. They are anxieties born not of neurosis, but of a working knowledge of the industry.

Mr. Brian Walden: I say at once that the Opposition has no objection to the Department of Trade and Industry monitoring insurance premiums. We are glad to see a Minister, or indeed anyone, from the Department present. In Standing Committee word was brought from afar from time to time about what the Department might think on various issues, but of members of that Department we saw none. It must have been a pleasure for the Minister to have discovered what we have been talking about in the Committee, although his speech introducing this new clause was commendably brief—indeed cursory.
In principle we have no particular objection to what is suggested is being done by this new clause, although there are some great oddities. Like the hon.

Members for Pembroke (Mr. Nicholas Edwards) and for Oswestry (Mr. Biffen) I have no clear idea of how this fits with the code.

Mr. Ridley: It does not.

Mr. Walden: The hon. Member for Cirencester and Tewkesbury (Mr. Ridley) says that it does not, and he may be right. That we shall not find out at this stage and we did not find it out in Standing Committee. I think it was generally understood that the monitoring arrangements related to agencies, but outwardly here they are to be supervised by the Secretary of State.
I do not make much of it, but I make some comments on this suggestion. I do not believe for a moment that it will happen. The document could have a rubric saying, "Prices and Pay Code (Recipe for Bankruptcy)" because if the Government were to carry out the suggested provisions that is precisely what would happen. I regard this as a complete sham and window-dressing used to effect a pay freeze, but it will not happen. It is inconceivable that the Government could do this, and certainly they have not the staff which would be needed. For the sake of form, I join the hon. Member for Oswestry in asking how many additional staff the Government would expect to use, but I have no confidence in any answer that could be given, because I do not believe that they intend to do it.
I believe that there will be a little random, capricious and no doubt foolish intervention on such occasions as when the Government see a little political capital to be made out of it, or when there is a particular storm about insurance premiums and increases in premiums, which are disliked by everyone except those who underwrite them. But the idea that there will be any State monitoring is not one on which I shall waste the time of the House investigating with care.
Strictly on the subject of insurance premiums, it has always seemed to me—and nothing said in this short debate has changed my mind—that the great factor of instability in insurance relates to motor car insurance premiums. This may possibly apply to life insurance, despite what the hon. Member for Pembroke said—I thought he rather inclined to a different opinion—and it has always been my


opinion that it may apply to marine insurance also. I believe that personal insurance has been relatively stable, but the whole business of prognosticating about the future is difficult in motor insurance. A scheme whereby the State could provide for motor car insurance would do more to regulate insurance premiums than anything likely to be done under this clause.

Mr. Ridley: Does the hon. Member agree that if control were exercised by the clause at any stage any insurance company would be liable to come back to the Government saying, "You have controlled our premiums. Therefore can you subsidise us if we go bankrupt?". What the hon. Member is suggesting would surely be a step on the road to nationalisation?

Mr. Walden: I do not disagree, but I do not regard this as a first step. If a member of my party came to me and suggested this as a method that should be used, I would say, "No, if we are to start messing about with premiums we might as well take them all over because we shall be held responsible for any loss." However, I say that there is no serious intention of doing anything of this kind despite what was said from the Treasury Bench. A sensible thing for the Government to do when they have a free moment from changing their mind would be to think about the whole issue of motor car insurance and whether a State scheme in that sphere would not make a better contribution than this clause.
We shall not divide the House against this clause. We shall underwrite the questions which have been asked. We are not very optimistic about the answers we shall get, but we shall listen, as we always do, with interest to see whether for once we can cull some information as to how in practice this proposal could work.

Sir G. Howe: The welcome by the hon. Member for Birmingham, All Saints (Mr. Walden), which I acknowledge, is, I fancy, more penetrating than warm. I shall try to answer some of the questions which have been put.
I begin by asserting quite directly that the powers sought here in relation to insurance company charges are exactly the same type as those provided for in earlier

clauses of the Bill in relation to prices and charges of other kinds. They are of the kind that has been exercised during the standstill as appropriate for exercise during stage 2. They have been exercised during the standstill with complete effect because there have been no increases of insurance company scales since the commencement of the standstill on 6th November, except in one exceptional case of a small company in a loss-making situation. They are, therefore, powers which are intended to be used, which can be used and which will be effective so far as they are used. There is nothing relating to a sham such as was suggested by the hon. Member, either in this field or in any other. They are part of an effective policy of control of prices and charges.

Mr. Norman Atkinson: Will the right hon. and learned Gentleman reiterate what he has just said? I understood him to say that during the period of freeze all premiums which were renewed were renewed at the same level as applied last year. Does he say that there were no increases in premiums?

Sir G. Howe: I said that there were no increases in premium scales and that in fact where a new scale was introduced and brought into effect, as each policy holder came up before 6th November that new scale applied. There was no introduction of new scales starting after 6th November. That is what I said and what I meant to say. Obviously if a new scale came in during April last year and policy holders came on to the new scale, it would be at the higher rate, but there were no increases in the scales at which renewals have been taking place since 6th November.
The hon. Member for Birmingham, Northfield (Mr. Carter) asked whether the Minister's power to direct rate increases, or the Minister's powers generally under the Insurance Companies Acts, would be exercisable during and notwithstanding stage 2. The answer is, yes indeed, just as they remained exercisable during the standstill, because the two matters have to be considered together. If the situation is reached in which an insurance company appears to require intervention under the Insurance Companies Acts, that power to intervene remains and has not been affected. That


is not inconsistent with the overriding objective of controlling price or cost increases in insurance or elsewhere.
4.30 p.m.
He also asked why the clause was needed in relation to insurance premiums, tending, I thought, to imply that they ought to be exempt from control, because of his anxiety about the possibility of insurance companies moving into bankruptcy. The answer is that insurance company charges are an element forming part of the total panoply of prices in relation to which control should be exercised so far as is consistent with the continued prosperity and soundness of the industry in question.
The position in that respect is the same as it was for insurance and resinsurance in 1966. The hon. Member also suggested that there would be a massive attempt to raise insurance premium rates before phase 2 started. The answer is that such an attempt would be no more permitted for insurance premium rates than it would be for any other prices. Insurance company rates are subject to the standstill and if any attempt were made to raise them before phase 2 began, the powers already in existence could and would be exercised.

Mr. J. Bruce-Gardyne: While accepting what the Minister says about phase 1, may I ask him to confirm that once we come to phase 2 there will be nothing in law to prevent insurance companies from putting up their premiums to the extent that they believe necessary?

Sir G. Howe: Insurance companies will be subject to the same guidance as other sectors of service industry.

Mr. Biffen: Can the Minister say what is the legal position under the Bill when enacted? Are insurance companies legally required to give notification of alterations in scales and if so, under which section?

Sir G. Howe: My hon. Friend knows the answer to that quite well. He may criticise it but his criticism would be without foundation. I will amplify that a little. The position is that so far as the code will be operative and so far as the standstill guidelines have been operative, they acquire the force of law when an order is made dealing with

prices under Clauses 6 or 7, or whatever the relevant clause may be.
Until such an order is made those concerned with the fixing of prices or charges are responding to the requirements, not legal requirements, set out in the standstill. My hon. Friend the Member for Oswestry (Mr. Biffen) sounded as if he were complaining about that position in the first part of his speech and in the latter part he sounded as if he were rejoicing because he was suggesting that to have the entire framework of the code contained in a body of immediately and directly applicable criminal law would be unacceptable and unpalatable.
If guidelines are laid down, as they are in the code, if they are approved, as they will be if the code is approved by Parliament, and if the Statute gives power to enforce those guide-lines when they are manifestly being infringed, then that is a more sensitive way of applying this kind of policy for controlling prices or wages than any other alternative.

Mr. Biffen: The longer he speaks the more my right hon. and learned Friend sounds like the Secretary of State for Employment. I do believe that it is the subject which infects the speaker. My question was under what section of the Counter-Inflation Act, if it is enacted, will insurance companies be required to notify the Government of any alteration in scale charges?

Sir G. Howe: They are not required to notify under any part of the Bill as it now stands. The fact is that no applications for or notification of rate increases have been made—[HON. MEMBERS: "Why should they?"]. Hon. Members must understand the effective and sensible way in which this proposal works. During the period of the standstill there have been several hundred complaints about alleged increases in insurance company scale rates. They have all been investigated. With three exceptions, none springs from changes in insurance company scale rates since 6th November. There were three exceptions identified which were the result of clerical errors and not of any change in the rate being applied. In all those cases the excess premium has been returned to the policy holder. The fact


that there has been that degree of information about the working of the standstill for insurance company premiums enables me to assert that there have been no changes in insurance company scale rates.

Mr. Carter: Is the right hon. and learned Gentleman saying that as insurance companies are not required to notify his Department about premium increases or intended increases, and if he receives no complaints from the general public, insurance companies are at liberty to increase their premiums to whatever level they want?

Sir G. Howe: They are subject to the possibility of a requirement to reduce their scales as a result of an order made under the Act in the same way as any other increase in price or charge could be reduced. It is upon that basis that the standstill has been and is being observed, with the support of the insurance industry, as with the great mass of industry and trade in the country. It is subject to exactly the same sanction of having its prices and scales reduced by order or notice under this measure as anyone else fixing any other price.
My hon. Friend the Member for Cirencester and Tewkesbury (Mr. Ridley) suggested that there was a conflict between the requirements of insurance companies legislation and that set out in the Bill. It was said that the power now proposed to be taken in this clause was a new one additional to those contained in the Bill as considered in Committee. The nature of the change now being proposed is merely an identification of the Secretary of State as being the person who should exercise the power in connection with insurance companies.
Insurance companies have been under control during the standstill period. This is merely an identification of the way in which they should be controlled. It is to remove any possibility of conflict that we propose a provision of this kind, to have the Insurance Companies Acts control and the control under this measure exercised by the single authority of the Department of Trade and Industry.

Mr. Anthony Wedgwood Benn: If the insurance legislation is intended to see that premiums are high

enough to prevent insolvency and the present Bill is designed to see that they are low enough to prevent inflation, and if both these powers are to be exercised by the Minister's own Department, what discretion is there left to the insurance companies, and if there is any discretion left to them, under which powers do they exercise it?

Sir G. Howe: Insurance companies have the same discretion as anyone else to fix a price or charge during the standstill or the stage 2 period. The discretion has to be exercised in the context of the policies laid down in the code for stage 2 just as anyone fixing the price for any other commodity has to have regard to the code because of the prospect that he could have his price reduced or rolled back by order or notice made thereafter. An insurance company is subject to the same guidelines.

Mr. Ridley: Suppose my right hon. and learned Friend were to control the level of a premium where an application had been made by an insurance company, as is assumed by his Department, and subsequently that insurance company went into bankruptcy with the result that hundreds of thousands of policyholders lost the value of their policies—which might well be life policies—would he not agree that the Government would then be bound morally to accept responsibility for compensating all those policyholders? Will my right hon. and learned Friend confirm that the Government are now taking responsibility for bankrupt insurance companies if an order has been placed restricting the premiums the companies may charge?

Sir G. Howe: I cannot confirm that. My hon. Friend the Member for Cirencester and Tewkesbury knows, because of the arguments he was advancing in relation to the powers of the Department to intervene in insolvency when he was there, that the factors that have to be taken into account are the same as those he was then taking into account.
As the hon. Member for Birmingham, All Saints said, this is no more a first or a second step towards nationalisation of insurance companies than are the provisions of any insurance companies Bill.
Governments of both parties have accepted as a perfectly legitimate and necessary exercise of governmental power


some surveillance by the Department of Trade and Industry in the interests of solvency. Surveillance to prevent inflationary price increases in insurance premiums for the duration of this Counter-Inflation Bill is not a fundamental change in what already exists in the insurance companies legislation.

Mr. Benn: This is an important point. There is, of course, a difference between seeing that premiums are high enough to meet one's obligations and the Government's giving an order that premiums are to be kept down. If, following an order by the Minister to keep premiums down, there is an insolvency, is the Minister saying the Government would accept no responsibility for those policyholders who had lost what would otherwise be owing to them as a direct result of Government action? Are not the Government in a sense bound to underwrite the consequences of their own orders restricting the premiums which are to be charged as a result of the orders?

Sir G. Howe: The Government would be no more directly and automatically bound as the right hon. Gentleman implies in those circumstances than they are in a comparable situation under the existing insurance companies legislation because the same judgment and criticism could be advanced the other way round. Indeed, the hon. Member for Birmingham, Northfield said so in the context of V and G.

Mr. Carter: If the Minister is denying what my right hon. Friend said, were he, under the power he has regarding solvency, to find that a company is on the verge of bankruptcy and, in order to get out of that position, that company requires an abnormally high premium increase, would he sanction that increase? If that is the case, what reason is there for the clause as it stands?

Sir G. Howe: The criteria that arise in that case are identical to those that arise in relation to any other enterprise as set out in the code. Just as the code makes provision for either a loss-making or low-profit enterprise, so the same kind of considerations would have to apply in the situation to which the hon. Member has just referred.
The hon. Member for West Ham, North (Mr. Arthur Lewis) raised some

shadows from the European scene. I do no more than remind him that the provisions so far before the Communities concerning harmonisation relate not to insurance company rates but to establishment.
The hon. Member for Pembroke (Mr. Nicholas Edwards) and several of my other hon. Friends inquired about the intention of the Government to make any long-term change. The hon. Member for Pembroke talked about dirigisme. My hon. Friend the Member for Oswestry, in not quite an Anglo-Saxon but in a Greco-Anglo-Saxon way, talked about politicisation of the insurance industry. Neither of those is either an objective of the Government or the result of these provisions. We fully recognise the extent to which our own insurance company business has operated in some ways distinct from others round the world. That is reflected, for example, in the Bill now under consideration in another place.
All that is being proposed here is the power to require notification by use of the powers under Clause 12 in relation to insurance companies just as to everyone else and the power to make orders under this new clause to restrict increases in premium rates.
As to the specific question asked by my hon. Friend the Member for Pembroke, overseas insurance rates, in the same way as exports of other commodities, are not intended to be covered, nor are those forms of insurance of the kind to which he was referring where rates are subject to negotiation from case to case. The area intended to be covered is primarily that where scheduled rates are the main factor in fixing the cost of insurance.

4.45 p.m.

Mr. Bruce-Gardyne: I am afraid the Minister still has not cleared up what would be the legal position under phase 2 if this new clause is approved in two respects. First, subsection (1) of the new clause says
(1) The Secretary of State shall have power to restrict insurance premiums".
Does it mean that if my insurance company puts up my motor premium and appeals to the Secretary of State he will have power retroactively to have that premium reviewed? According to my


understanding, that is not what the new clause says. Secondly, he has just said that the Secretary of State would have power to require notification of premiums. Where does he find that in the new clause?

Sir G. Howe: I answered the second question of my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) when I referred to the power already existing under Clause 12 to require notification.

Mr. Biffen: Would not my right hon. and learned Friend agree that in the real world, and in the terms in which my hon. Friend the Member for Pembroke (Mr. Nicholas Edwards) is considering this matter, there is a fair distinction whether this notification will be required by notice or by order, leaving aside the question of the parliamentary considerations that flow from that decision? Would the Minister take this opportunity to elaborate a little more precisely how he will require the notification of this information and what types of information he will require?

Sir G. Howe: My hon. Friend the Member for South Angus asked me where the Minister had power to require such notification. The answer is that this derives from Clause 12 either by notice or by order.
The question of how far the Minister will find it necessary to use statutory powers to require notification is one that does not yet have to be answered because notification of the kind likely to be forthcoming in respect of other prices and other commodities may well be forthcoming without the need to exercise statutory powers. The matter is at present under discussion between my officials and the industry. As in earlier periods, it may well be possible to secure a voluntary pattern for notification which is obviously preferred to a statutory requirement. The statutory power arises under Clause 12. The statutory power to restrict the premium arises under subsection (1) of the new clause we are now discussing.

Mr. Nicholas Edwards: My right hon. and learned Friend made a very important statement before the most recent interventions.
Time and time again whilst speaking from the Dispatch Box the Minister has talked about the control of insurance scales. He has just said that these powers do not apply, apparently, in cases which are individually negotiated. I should be grateful if the Minister will elaborate on this point. Is he saying that the powers provided under the clause apply only in cases where insurance scales are published by the insurance companies?

Sir G. Howe: The powers are, generally, the powers provided under subsection (1), but it is not the intention that they should be exercised in relation to overseas insurance or insurance contracts which are the subject of individual negotiation. Equally, for example, the power to make variations in individual premium ratings because of individual changes in risk would not normally be interfered with. It is in relation to scale rates, which can exercise a substantial influence on the cost of living, that it is the intention to exercise the powers contained in the clause.

Mr. W. R. Rees-Davies: I understand my right hon. and learned Friend to say that, whilst it may be possible to exercise some control over the general rates applicable across the board, there is no intention to deal with the case that arises with motor insurance where the individual characteristics of the driver may determine the insurance risk. It is only in the very broadest terms that the Government consider that they should take power to monitor loosely general control. Is that the nature of what my right hon. and learned Friend is saying?

Sir G. Howe: The nature of what I am saying is that we recognise—and this is an explanation for the two questions asked by my hon. Friend the Member for Pembroke—that some flexibility is required in relating premiums to the kind of claim and the nature of the risk, particularly in individual cases. The intention is to exercise control consistent with the provisions of the code dealing with services in relation to scheduled rates. These are the broad matters operating across, the board which could adversely affect the cost of living if prices were to increase too sharply. The clause will give us the power to exercise that intention in a way that is most effective.


most workable and consistent with the rest of the proposals.

Mr. Ridley: If there is to be a higher claims expectation and a rise of, say 10 per cent. in the premium, will paragraph 19 of the code apply, whereby only 50 per cent. of allowable costs will be taken into consideration? My right hon. and learned Friend will agree that there can be no increase in productivity through a worsening in claims experience. Productivity is not relevant in that situation. If insurance companies are to have 50 per cent. of their increased costs disallowed, it means, automatically, if the code is applied, that they will be threatened with lower and lower solvency margins.

Sir G. Howe: Unusually for him, my hon. Friend has read paragraph 19 of the code with less than his usual care. Paragraph 19 requires not more than 50 per cent. of allowable cost increases arising from pay increases to be passed through as price increases, and paragraph 19 does not apply to the provisions covered by the clause.

Mr. Brian Walden: The Minister has given way generously, and I did not interrupt him while his hon. Friends were questioning him as I did not wish to intrude into private grief. The Opposition cannot allow the clause to go by with the answers that the Minister has given to his hon. Friends on the legal situation without at least saying how they understand it.
Whenever Ministers are asked this question—the right hon. and learned Gentleman is not the only Minister who is guilty—an incredible "duckspeak" comes out which must be incomprehensible outside the House and is barely comprehensible inside. The reason—a dangerous one—is that the Government are trying to con us that they are doing things by law when they are not doing things by law but by exhortation.
Under this clause, as under the other provisions of the Bill, the Opposition's understanding is that discussions are going on about notification. It might become a statutory requirement, it might be done voluntarily. Eventually, doubtless after the Bill has become an Act, hon. Members will read in the newspaper one morning which it is to be.
On the other question about where the legal sanction is, the legal sanction is that one can do as one chooses and remain within the law until such time as the Government or the agencies serve an order on one, and then, as a law-abiding citizen, one must obey the order. That is how the Opposition understand it, and why the Treasury Bench cannot put it like that I do not understand.

Question put and agreed to.

Clause read a Second time, and added to the Bill.

New Clause 2

EXTENSION OF PROVISIONS OF RENT ACT 1968

For the purposes of the Rent Act 1968, properties having a rateable value on 31st March 1973 of £600 in the Greater London area or £300 in the rest of the country shall be treated as if those rateable values were £400 and £200, respectively.—[Mr. Tugendhat.]

Brought up, and read the First time.

Mr. Christopher Tugendhat: I beg to move, That the Clause be read a Second time.
I will not delay the House by making a protracted speech. Unlike many other right hon. and hon. Members in the Chamber, I was a member of the Standing Committee, and I feel that it is desirable that others should have the opportunity to make a contribution to the debate.
The object of the new clause is to improve the Bill. It is not to bring about a radical change in the way the Bill is set out or in the way it applies but simply to bring about an improvement covering one sector of the economy. I hope that the Government will understand that social justice and a severe problem in the London housing market require action and that they will give an assurance that they are prepared to take action.
I am not suggesting that the way in which the new clause is framed is necessarily the ideal way of meeting the problem. We have put forward a proposal which we think will be workable and helpful, but our object is to draw the Government's attention to the problem and to get them to act. If the Government can find another way of dealing with the


problem, we shall approach their ideas with a completely open mind.
The problem to which I drew attention mainly affects London, although it has some effect on a number of towns and cities outside. It is about London that I will speak because that is the place I know best. In London, as in the rest of the country, most of the housing market is subject to controls and restraints, but the unregulated tenants are excluded from the housing legislation—and, as the Bill is drafted, will be left entirely unprotected from staggering rent increases after the freeze ends. I appreciate that rents are a delicate subject, and I have no intention of reopening debates which range much wider than this Bill. I hope that the House will agree that the position of the tenants I am talking about is exceptional.
I have brought to the House several letters from constituents which show that the increases range substantially over 100 per cent. and sometimes over 200 per cent. I have here two examples of rents which are expected to go up as soon as the freeze ends from £850 to £3,000 and from £700 to £2,800. I do not advocate that special privileges or protections should be accorded to these tenants. I am not suggesting that they should be given any protection which is not available to other sections of the community. But some shield is necessary to protect them against immediate, sudden and absolute increases of that kind.
The main argument that is used against the extension of control into this area is that it would dry up the market. Those of us who are familiar with the situation in Central London do not find it easy to accept that argument. The market is already drying up rapidly and it has diminished significantly in recent years. One has only to look at any of the blocks in neighbourhoods around the Palace of Westminster to see the number of flats which were on the rented market a few years ago and which have now been withdrawn. Some companies have made very substantial sums of money out of this break-up activity, as is well known.
5.0 p.m.
There is still a rented market in this sector but it is much less vital to the health of our society than it sometimes

appears. The situation in the rented market is not anything like as beneficial to the people living in London as is sometimes alleged. Increasingly, flats of the kind of which I am speaking go not to people who live and make their life in London in the real sense of those words. They go to diplomats and business executives, either foreign or British, people who are not really living in London, but who regard their accommodation here as a pied-à-terre, where they stay during the week, returning at the weekend to the place where they have their real home. Alternatively these flats are going to people who regard London as a post in which they stay for a year or two, or three, four or five years, and then return to the place where they have their main home and main career.
Of course, a great commercial centre like London must provide accommodation for people of that kind. We need the diplomatic and international business community, and executives from companies outside London who have to have accommodation within London. We recognise that, and nothing that I am saying should be taken as in any sense attacking those persons. But there are serious implications when a community of people who live their lives in London, in the sense that they bring up their children and participate in the life of the community, staying here for many years and feeling themselves a part of the city, find it impossible to secure rented accommodation and are pushed out of the middle of the city.
It may be said that they ought to buy. It may be asked, why do they not buy? That is not always possible. The price of the kind of flat we are talking about has risen astronomically in recent years. Many are priced at anything from £30,000 to £60,000 or more. In this pile of letters I have the example of a flat for which the occupant is at present paying an annual rent of £950 and for which the landlord is asking a purchase price of £55,000.
It simply is not possible for a great many people to raise mortgages of that kind, and even if they strain themselves to the uttermost to do so, they may well find that they are mortgaging themselves to the point of foolishness, beyond the point to which they can afford to go. The people most affected by this development


are often the old and people past the peak of their earnings who have given a lifetime to the community, people whose roots are deeply embedded in it but who have no possibility of either increasing their income or raising the kind of money that would be needed to pay a mortgage of that kind. Another group who are seriously affected are the young, people bringing up families, who are hoping to be able to play a large part in the community.
It is a matter of sorrow to me, as I am sure it is to those of my hon. Friends who represent central London constituencies, when we find that increasingly people move out of our areas as soon as they begin to have families, because they can no longer afford to remain. When a city reaches the point where the old and the people bringing up a family can no longer afford to live in it, the life and heart goes out of it and it becomes in many ways almost a desert of buildings. There are, therefore, important social implications in the movement about which I am speaking.
As I have said, I am not suggesting that the particular proposals we are putting forward are necessarily the ideal way of tackling the problem, but they draw the attention of the Government to a serious problem and one which I would hope the Government will feel able to tackle. I recognise, too, that many of the difficulties I am talking of arise because the pool of rented accommodation in London at all levels has diminished in recent years, and it is essential to increase that pool of rented accommodation and to build more homes, both for rent and for sale, in London. It is also important to attract into the market more landlords so as to reverse the situation where we have a diminishing pool of accommodation falling into the hands of a diminishing number of landlords.
That, of course, is a bigger problem, outside the scope of this Bill. Here we are talking of a specific, identifiable problem of people having at present no shield against very heavy increases. We ask that they should be given the same rights and privileges as other tenants. I hope that the Government will see their way to meet our wishes, if not here, then in another place.

Mr. Geoffrey Finsberg: I should like to support my hon. Friend

the Member for the Cities of London and Westminster (Mr. Tugendhat) in his argument. It is clear that there is a growing shortage of this type of property in inner London. Since the break-up and disappearance of probably one of the largest landlords, Key Flats, one has seen the disappearance of what I would call a broad social idea of landlordism which was practised by London County Freehold and the growth of certain characteristics which, frankly are alien, I believe, to everyone in this House.
In the new clause which we are asking the House to accept we are saying that there should he an increase in fairness. At the moment one has the situation that in one block there are some flats with a rateable value of £390 and other flats with a rateable value of £410. The first flats have all the protection of the Rent Acts in respect of rent allowances and security of tenure, while the person unlucky enough to have a flat with a rateable value of £410 has no protection of any kind.
It is right to point out that the figures which we have put in this new clause relate to the rateable value as at 31st March this year and take no recognition of the rateable values which will come into effect on 1st April under the new clause. Because there is a wide amount of confusion on this, it is right to say again that there is no alteration at all in the existing values of £400 or £200 so far as the rateable value limits are concerned.
Having said that, I want to develop one of the arguments put forward by my hon. Friend the Member for the Cities of London and Westminster, that there are certain characteristics which are wrong and which are driving out of London the kind of social mix we want to see. I feel it is right that I should again give to the House details of a case which I have already given, that of a tenant who lives in my constituency whose lease had come to an end. He was negotiating with his landlords, the Freshwater Group. This current rent was £850. His lease being up he was negotiating by letter with the area manager of Freshwater. Finally, they had a meeting and after a fair amount of discussion there was virtual agreement that the new rent should be £1,350. Just as the Freshwater area manager was leaving my constituent he asked, "Your rateable


value is below £400, is not it?" My constituent replied, "No. It is £410." The Freshwater man then said, "I am sorry. I withdraw that figure." A few days later an offer in writing came through of £2,000 per annum. It is alleged to have been a mistake in that Freshwater did not know that they were covered by the freeze. But that is not so important. What is important is that in the same block of flats there were people whose rateable value was just under £400 who had the full protection. That is why my hon. Friends and I feel it right to try to extend the protective figure for greater London from £400 to £600.
Although this is mainly a problem in greater London it is also occurring in some cases in other parts of the country where the rateable value is £200. We say that the same proportionate increase should be applied to bring it up to £300.
As my hon. Friends and I have said before, there are other issues which still operate such as the phoney service charges, and I hope very soon that my hon. Friend the Minister for Housing and Construction will be able to tell us that he has received the report on this subject which he commissioned some time ago.
I hope that the Government will find it possible to accept this clause. I know that all Governments say that they cannot accept any new clause which is drafted by anyone other than a parliamentary draftsman. Even a clause drafted by one of my hon. and learned Friends—even my right hon. and learned Friend the Minister for Trade and Consumer Affairs—still would not be acceptable to a parliamentary draftsman. It may be that we shall have to accept a request from the Government not to press the clause and instead to allow a "properly" drafted clause to be inserted at a later stage.
However I hope that my hon. Friend the Minister for Housing and Construction will appreciate that there is great strength of feeling on this issue in greater London and that it is an issue of fair play and social justice. That is precisely why we have picked this figure. We feel that it operates at a reasonable level.
The House will recall that the tenants whom we are discussing are covered under phase 1 in that their rents cannot be

increased and they cannot be evicted if their leases come to an end under phase 1. I hope that my hon. Friend will agree that what we are asking the House to accept is right even though the detailed wording of the clause may not be wholly acceptable. In any event, if the wording is not acceptable and my hon. Friend asks to be allowed to produce parliamentary language at a later stage, any tenant who is affected should not tamely accept any notice to quit and leave his property. He should go to the courts and say to the landlord who is trying to get him out, "I want a court hearing to give me the protection of the law while phase 1 is in operation".
I hope that my hon. Friend will have found a way of accepting this principle so that tenants receive the protection of the 1968 Act which means the security of tenure which they deserve and the protection of the fair rents system and rent allowances to which I contend they are entitled.

5.15 p.m.

Sir Brandon Rhys Williams: I want to speak briefly to congratulate my hon. Friend the Member for Cities of London and Westminster (Mr. Tugendhat) and my hon. Friend the Member for Hampstead (Mr. Geoffrey Finsberg). In central London we have our own special kind of inflationary problem in that too many people are chasing too few rooms.
Although it has been said in the past that above the £400 limit there is a free market and that buyers and sellers can work out a reasonable balance between them, that is no longer true and it is especially untrue in South Kensington where there are a large number of retired and professional people who are quite unable to compete at the prices that they are asked.
The reason why I say that there is no longer a free market is partly that the incomes of such people are fixed. It is also that people who are seeking accommodation have special reasons why they are willing to pay almost any price. It may be that they come from abroad and have the backing of multi-national companies or embassies which feel for prestige reasons that they need accommodation in central London of a particular quality.
Very often the developer has in mind a change of user and is hoping to turn his accommodation into hotel or short-stay furnished accommodation which for a time can be very lucrative. It may be that there are potential purchasers who are willing to offer lump sums. These may be people who lose little of their net income whatever they pay but who have every reason at present to expect capital gains when eventually they dispose of their properties.
Over the years, the effect of controls in central London has been to freeze the redevelopment of property and to prevent the natural improvement of much of the area. This has created an artificial shortage which is felt especially in South Kensington.
Furnished tenants will shortly get the help of the new rent allowances. I congratulate the Government on the speed with which they have brought in the rent allowances for furnished tenants. But something must be done for people who have no protection left when their present leases expire. There is a great deal of anxiety in my constituency about this matter, and it is partly occasioned by the Counter-Inflation Bill. We need a new policy for Central London. But for the present we must have an interim measure of protection for people in accommodation above the £400 limit. I do not know whether the wording of the clause is ideal, but I am certain that the intention of my hon. Friend the Member for Cities of London and Westminster is right and I hope that the Government will pay attention.
I should like to be able to say from today that people whose leases are expiring in properties which are not subject to any kind of control need have no more anxiety and that they should stay put when their leases end, counting on the Government to take appropriate action as part of their counter-inflation measures.

Mr. Kenneth Warren: As a Member representing a constituency outside London which has many similar problems to those mentioned by my hon. Friends, I wish to support the clause. There is need for an up-grading of these scales. We have cases in Hastings where there are not only revaluations going from £210 down below £200 and still not qualifying for the protection of the 1968 Act because they were not operative

on the qualifying date of the 1968 Act, but many just over £200 where people should have the protection warranted by the extension proposed by my hon. Friend the Member for Cities of London and Westminster (Mr. Tugendhat).
In speaking of one town on the south coast, I hope that I am perhaps speaking of many which have the same component as that mentioned by my hon. Friend the Member for Kensington, South (Sir B. Rhys Williams) of a large concentration of retired people who need the protection that this extension can give them.

Mr. Reg Prentice: So far this Report stage has been fascinating in that it has consisted mainly of an exhibition of the private griefs of right hon. and hon. Members on the Government benches, with right hon. and hon. Gentlemen on the Treasury Bench making the Government case and their supporters on the back benches making the Conservative Party case. I can promise—

Mr. Warren: It ought to be made clear that this is not a private grief. It is a matter of considerable importance to thousands of our constituents.

Mr. Prentice: If the hon. Gentleman had contained himself a little longer, he would have heard me agree. The Opposition will be discriminating and will look at each case on its merits. In some cases we may find ourselves supporting the Government as the lesser of two evils.
Hon. Gentlemen who have spoken have made out a sound case. It was slightly nauseating for some of us to listen to their arguments on behalf of the tenants concerned, because many tenants are suffering hardship, and the prospect of greater hardship, besides those in the relatively high rents bracket whom we are discussing on the new clause. Any serious counter-inflation policy should include the suspension of rent increases due under the Housing Finance Act. There will be a real problem of hardship and unfairness to thousands of people when the temporary provisions come in. Therefore, the new clause deserves support. But we should look at the new clause not only from the point of view of protecting the tenants affected, but because high rents of this kind generate high incomes.
According to the hon. Member for Cities of London and Westminster (Mr. Tugendhat), if people own the right properties in the right place at the right time they are able to secure higher rents of the scale mentioned by him. Clearly this makes a complete nonsense of the income limits which are an essential feature of other parts of the policy.
For those and many other reasons which can be given, I suggest that the new clause deserves support.

The Minister for Housing and Construction (Mr. Paul Channon): I know that the House is anxious to make progress with the Bill today. Therefore, I will not detain it long. I am sure that everyone in the House has great sympathy with the speeches by my hon. Friends the Members for the Cities of London and Westminster (Mr. Tugendhat), Hampstead (Mr. Geoffrey Finsberg), Hastings (Mr. Warren) and Kensington, South (Sir B. Rhys Williams) on what is obviously to them an important and deeply felt issue. I also note what was said by the right hon. Member for East Ham, North (Mr. Prentice).
As a preliminary, I should like to deal with one point in the speech by my hon. Friend the Member for Hampstead. He is not in his usual place. I had better not say that he has gone to another place as that has not yet happened. He asked about service charges and whether I had had a report. I am engaged in looking at the report on service charges, which has only recently arrived. I note what my hon. Friend said about the issue, and I recall the argument that he and others pressed last year.
I discussed the problem of this section of tenants with my hon. Friends on a number of occasions. They are concerned about it, and I think that everyone will agree that they have acted in the best traditions of constituency Members in bringing this matter to the attention of the House.
The House might be interested to know the figures involved. I estimate that there are about 20,000 tenants of unfurnished property above the rateable value limit. About half of these are in inner London. The other half are largely alongside the South Coast, which no doubt caused the interest of my hon. Friend the Member

for Hastings. I know that my hon. Friend the Member for Hove (Mr. Maddan) is also deeply concerned about the problem.
About 80 per cent. of these properties in London appear to come within the bracket chosen by my hon. Friends in the new clause. Typically these properties are let on three, five or seven-year leases and the rents are market rents. It will be within the recollection of hon. Members that the rateable value limits were fixed in 1965 at £400 in London because it was felt that there was no shortage of rented accommodation above that level and that therefore there could be a market above it. I should emphasise that we are talking about constant levels. The rateable values do not increase until the end of next month.
I accept that that situation no longer seems to apply today and that there is a shortage of accommodation in the lower rateable value bracket with which my hon. Friends have dealt. I am aware of their concern because of this new situation. My hon. Friend the Member for the Cities of London and Westminster discussed this matter in Committee. I know his views well and have discussed them with him on many occasions. I also know the views of my hon. Friend the Member for Kensington, South and other hon. Members who have not spoken today.
My hon. Friends are worried about steeply increasing rents and the distress that can be caused to some tenants. They are worried, as we all are, about frequent changes of landlord and insensitivity towards the personal needs of tenants to which such changes have given rise. They are worried about the plight of tenants who have to look for new accommodation because they cannot afford the new high rents being asked. I accept to a considerable degree my hon. Friend's diagnosis of the problem.
I recognise that this is a serious issue. My hon. Friends suggest that the answer is to raise the rateable value limit to a level which I calculate would bring 80 per cent. of unregulated tenancies within the Rent Acts. This would give tenants full security of tenure and access to the fair rents system and they would become protected regulated tenancies in the same mould as existing regulated tenancies. This is a possible course of action.
The House will appreciate that we are dealing with counter-inflation measures which have a limited life. This is an important problem, but it has not been central to the main issues confronting us in the Bill.
Therefore, in view of the views that have been expressed, the Government are considering what measures might be appropriate to meet the problems which have been described. If necessary, we are prepared to propose amendments to the Bill in another place to give effect to our conclusions on this issue. I could not go further than that in telling the House what the outcome might be. However, my hon. Friends having drawn attention to a serious and difficult issue, I assure them that I am sympathetic and the Government will, if necessary, propose amendments to the Bill to give effect to our final conclusions. I hope therefore, especially as one of my hon. Friends pointed out the difficulty imposed on private Members of drafting a clause and the essential nature of getting whatever measures are proposed right and watertight, that in view of the assurance that I have given my hon. Friends will not press the new clause.

Mr. Tugendhat: My hon. Friend's speech was the most helpful and sensitive that we have heard from the Treasury Bench regarding this problem which has worried us for a long time. We are delighted that the Government should now appreciate the nature of the problem and are prepared, if necessary, to bring forward amendments in another place to deal with it. On the basis of the assurance that we have received, I beg to ask leave to withdraw the motion.

Motion and clause, by leave, withdrawn.

New Clause 3

RESTRICTIONS ON PAYMENT OR CHARGING OF INTEREST BY BANKS, ETC.

(1) The Treasury shall have power to restrict the payment or charging of interest by banks and other financial institutions.

(2) The power conferred by subsection (1) above shall be exercisable by order, or by notice given to the institution, or each of the institutions, affected by the notice.

(3) An order under this section shall be subject to annulment in pursuance of a resolution of either House of Parliament.—[Dr. Gilbert.]

Brought up, and read the First time.

Dr. John Gilbert: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker (Miss Harvie Anderson): With new Clause 3 it will be convenient to take Amendment No. 24, in Title, line 4, after 'dividends', insert 'interest'.

Dr. Gilbert: The new clause is intended to give the Treasury power for the first time, in the context of the Government's counter-inflation programme,
to restrict the payment or charging of interest by banks or other financial institutions.
The new clause is set down at a time when interest rates in this country have been soaring faster and higher than ever before. The commercial banks have recently raised their base lending rates to a record height of 9½ per cent. The Bank of England's rate, which used to be called Bank Rate, is up at a record figure. Personal overdrafts, which were at 6½ per cent. or 7 per cent. a year ago, are now costing 12½ per cent. to 14 per cent. In short, Britain is now the most expensive country in the industrialised world in which to borrow.
What is more, the end is far from being in sight. As the banks are bidding frantically in the open market for funds, so we can expect the process to continue in a higher and higher, giddier and giddier spiral until the Government take drastic action.
When we look to see who is hurt by spiralling interest rates, the answer is almost everyone—everyone who has an overdraft, everyone who has or wants a hire-purchase agreement in the near future, and everyone who wants credit. Recently I drew attention to the fact that the Government permitted the introduction of the new Access credit card with rates of interest of between 19 per cent. and 21 per cent. on extended terms. That was a clear conniving at the substitution, under the overall credit limits, of higher cost sources of credit for relatively low cost sources from overdrafts and that type of borrowing. The cost is enormous. Mr. Graham Searjent in the Sunday Times of 25th February calculated that, already, the increase in interest rates was costing the average family about 25p to 30p a week.
5.30 p.m.
Briefly, his calculations were to the effect that the higher cost of mortgages on individuals, plus the higher cost of hire-purchase loans, plus the higher cost of bank loans, will amount to well over £200 million—the difference between the gross costs of outstanding borrowings at today's interest rates and the cost of the same borrowings at rates prevailing only a year ago. One fears that it will not be long before there is a general move upwards in mortgage rates
The Building Societies Association is already talking ominously about rates of 10 per cent., as against current rates of 8½ per cent. With the return on bank deposit accounts now nearly up to that which the building societies themselves can offer, it will not be long before the building societies have to offer more in order to keep their share of the funds coming into the market.
Everyone who wants to borrow suffers, but who is suffering least? As usual under this Government, those who suffer least are those who are most well off. Under the Finance Act, 1972 deductibility of interest was restored for speculative purposes and the more money one has, of course, the more advantage one derives from that enormous tax concession. It applies to everyone who wants to borrow, except, of course, under this Government, when one is borrowing only about £400 or £500. If one's interest charges are only £35 a year, one gets no relief. If one is paying £3,500 as a big speculator on the Stock Exchange, one gets virtually total relief of one's interest. It is all subsidised by the general run of taxpayers.
But who benefits? Somebody benefits under this scheme of things, and the people who benefit in times of high interest rates are those with money to lend. Those who can deposit funds with the commercial banks get a slightly higher return, but the people who make the most money are the moneylenders, the hire-purchase firms and above all the banks—as one might expect, the banks.
There has never been such an explosion of bank profits in British history. The figures are absolutely startling. Over the last couple of weeks or so, the four big commercial clearing banks have reported

huge increases in profits. The profits of the National Westminster Bank have risen by £42 million, those of Barclay by £35 million, those of the Midland by £20 million and those of Lloyds by £16 million—a total increase of about £113 million in bank profits. The increase in the second half of 1972 is of the order of 60 per cent. pre-tax.
We have every reason to expect that this increase in profits will continue and to believe that those figures understate the true position, because to some extent they are weighted down by the profits of the banks' overseas operations, which are on nothing like such a munificent scale as the profits from their operations in this country.
To quote Mr. Michael Blanden of the Financial Times about a week ago:
Stockbrokers are united in expecting further substantial profits growth from the big banks.
How right he is, and how right they are.
There is nothing at all in the code, as I read it, that constitutes a direct attack on interest rates as such. How do the Government propose to control them? So far as I can see, they propose to rely, possibly, to some extent, on paragraph 38 of the code, on the question of the degree of profit in the best two of the last five years. But those five years are up to 1st April 1973, and as I have already shown, that would include one of the biggest bumper years in banking history.
It should be noted that the code contains provisions allowing companies price increases if their last five years' profits are unrepresentatively low. Of course—but there is nothing in the code to deal with those cases in which any two of the last five years contained profits which are unrepresentatively high. The Government's attitude is virtually total helplessness.

Mr. Bruce-Gardyne: Before the hon. Gentleman concludes, could he help the House by giving an indication of the impact he thinks that acceptance of his amendment would have on monetary policy, and whether that impact would be desirable or undesirable, in his view?

Dr. Gilbert: I will come on briefly to the general question of monetary policy. The amendment is not quantified. It does


not instruct the Government what should be an ideal level of interest rates but merely gives them power to control them. Obviously, one cannot deal in quantitative terms without considering the total volume of money and of lending, the level of Government expenditure and taxation and so on.
The Government's general attitude is virtually total helplessness. It is true that they try, under paragraph 21(ii) of the code on page 5, to exclude certain types of interest charges from costs which will be allowable under phase 2.

The Chief Secretary to the Treasury (Mr. Patrick Jenkin): The hon. Member's reference to that paragraph allows me to put on record our apologies for a misprint. The word "not" should appear before "normally" in paragraph 21(ii). We are dealing here with interest which is not usually chargeable profit and loss account. Some of the Press have gathered that but some have not. Of course, in the subsequent issues of the Green Paper, we shall see that a correction slip is included. Those distributed yesterday did not have that correction and I therefor draw attention to the misprint.

Dr. Gilbert: I am grateful to the Chief Secretary. I had concluded that there had to be a misprint of precisely that nature. The effect, of course, if one reads paragraph 21(ii) with the "not" included, is that increases of interests rates attaching to debenture charges and that sort of thing will not be allowable costs but that interest on bank and hire purchase charges—

Mr. Jenkin: We are not in Committee, but I think that the hon. Gentleman has misunderstood the principles. The interest which would not be allowed as an allowable cost is interest which would normally be chargeable to capital account. Debenture interest would normally be charged to the profit and loss account, and any increase in the interest would be the allowable cost to the extent provided in the consultative document.

Dr. Gilbert: Very good. To the extent, then, that paragraph 21 disallows certain rates of interest for purposes of calculating profits under phase 2, it helps in the attack on the increase in the cost of living. For that, we must be grateful.
There is no direct attack on interest rates and there is therefore no direct relief for individual borrowers. For all practical purposes the Government are washing their hands of the situation and are saying that there is nothing whatever they can do about it.
This is particularly surprising in the light of the American experience in these matters. The Government have been at pains to copy as many salient points from the American phase 1 and phase 2 programmes as they possibly could, and have, like the Americans, set up a Price Commission and a Pay Board, using precisely the same terms and giving them similar powers. But there is one American institution they have completely neglected to imitate. As a third body reporting under the Cost of Living Council the United States Administration set up a Committee on Interest and Dividends and the attention of the Government has been drawn to their omission. They have done nothing about remedying it.
The Committee for Interest and Dividends in the United States has precisely the same sorts of powers as the Pay Board and the Price Commission. It has not been without effect. It was reported from New York as long ago as last November that as a result of administration attempts to "talk down" interest rates—as the phrase is over there—the First National City Bank agreed to alter the formula it used for computing its prime lending rates in order to lower these by about one-eighth per cent. as a result of the Government's suggestion. The Bankers Trust Company also agreed to abandon its floating prime rate for the time being as a result of a request from the United States Administration. More recently, at the beginning of this month when some of the large banks raised their prime rates from 6 per cent. to 6¼ per cent. the United States Administration, in the person of Mr. Arthur Burns, chairman of the Federal Reserve System, sent telegrams to all the banks asking for details of why they were changing their rates and what changes in costs and earnings lay behind it. He is reported to have insisted that
higher marginal cost of funds from sensitive money market sources should not be permitted to unduly influence institutional lending rates.
It is quite clear that if the will is there, at least something can be done by an


administration which is determined to act. Why are we suffering now? The answer, of course, is perfectly clear. We are paying the price of the enormous borrowing rates of the Government, the enormous deficit on public account, the enormous excess of public spending over public taxation. I do not share the general philosophy of Conservative Members that the only way to deal with this is by cutting public expenditure. What we are now getting and what we are now paying is the price of the Government's tax cuts that they gave over the last couple of years to their most enthusiastic and well-heeled supporters. Let no one be under any illusion about this. These tax cuts were presented as a cost-free bonanza to the British public. They were nothing of the sort. The public have been paying for them in higher prices and we are paying for them in higher interest rates.
Government spokesmen get up time after time at the Dispatch Box and at public meetings and boast about the enormous tax concessions they have handed out. They boast about how they have cut taxes by £1,000 million, £2,000 million and £3,000 million. They never say what is the inevitable reverse of the coin—that because of the tax cuts, by keeping public expenditure at the same level, there is an enormous deficit which is growing higher inevitably, as the report of the Expenditure Committee revealed only the other day. The CBI has just given as its estimate that if there is neither an increase in taxes nor a cut in public expenditure there will be a deficit of about £4,000 million in the coming year, even higher than this year. It must have its effect either on higher interest rates or on higher prices.
The Government face a very serious problem of debt funding just over the horizon. Their options are quite clear. They will have to make drastic cuts in public expenditure, or they will have to raise taxation, or there will be continued inflation, or there will be higher interest rates. The probability is that there will be a compromise with a combination of all four.
The Chancellor's chickens are coming home to roost at a rate and with a ferocity—if one may use that word about chickens—that I think he never would have anticipated. We on the Labour side

consider that the present level of interest rates, the pattern of interest rates, the way in which they are accelerating and the way in which they are being accompanied by indecent bank profits is a gross affront to this country. We say to the Government that they cannot hope to get the ordinary people to co-operate in the objectives of the Bill while the Government are prepared to sit back and see the moneylenders profit to such an outrageous extent at the expense of ordinary men and women who find it necessary to go into debt.

5.45 p.m.

Mr. Bruce-Gardyne: Fortunately the hon. Member for Dudley (Dr. Gilbert) more or less destroyed the case for his clause in his concluding remarks. I took it from the concluding passage of his argument that the Opposition would not seek to press the clause to a Division and I look forward to my hon. Friend's confirmation that if the Opposition had had any intention of doing so Government Members would have been invited to resist it.
The amendment is totally and utterly incompatible with the direction of monetary policy on which my hon. and right hon. Friends have now said—in my view a little belatedly—that we are embarked. The hon. Member for Dudley drew attention to the recent increase in bank profits and the only part of his argument with which I found myself in broad agreement was when he said that the increase in bank profits was likely to continue. He was absolutely right. I imagine that bank profits next year will be substantially higher than those just declared and I hope that will be the case because I belong to a minority cult in this House which continues to believe in profit. I have some reservation about regarding a certain level of profitability as excessive.
I certainly accept the hon. Member's proposition that we shall see a further increase in bank profits because, as far as I can tell, we shall see a further substantial increase in interest rates if the Government are genuine in their determination to bring the growth of money stock gradually under control. Although the hon. Member was careful in response to my intervention not to quantify the clause, and not to set levels at which the limitation on interest rates would begin


to apply, nevertheless he could hardly dispute that any artificial limitation on interest rates would be incompatible with a coherent monetary policy. The need to impose a control on interest rates would presumably arise only if interest rates were rising, and interest rates would be rising because unless they rose the money stock would grow more rapidly than the Government were prepared to tolerate. That is a logical sequence of events which could not very well be disputed.
The latest indications that we have had on the growth of the money supply are perhaps not entirely reliable. It is true that we should not judge too much by one month's figures. However, I doubt whether my hon. Friend the Chief Secretary would go very far in disputing the proposition that the rate of growth in the money supply to the latest period for which we have information is wholly excessive. We shall have a need in the months ahead for a more restricted monetary policy. At the same time, I am inclined to agree that the outlook for the net borrowing requirement in the next 12 months is, to say the least, ominous.
I do not regard the CBI as necessarily the ultimate font of all wisdom under its present direction. I am inclined to the view that its estimate of the likely net borrowing requirement in the year ahead may turn out to be an underestimate. It seems possible that the figure will be nearer £5,000 million than £4,000 million, not least because I suspect that this year's net borrowing requirement will turn out to be rather less than that predicted in my right hon. Friend's Budget last year. Inevitably public expenditure spending programmes have slipped behind schedule and, therefore, they will come on with greater force and volume in the year ahead.
The hon. Member for Dudley tried to some extent to cover his flanks by suggesting that rather than allow interest rates to rise to meet the predicament, the Government should go for higher rates of taxation. I do not believe that it is as simple as that. Alas, it is difficult to devise a type of additional taxation which will conflict neither with the objectives of this legislation nor with the objective of achieving a 5 per cent. rate of growth and an improvement in industrial investment.

Mr. John Cronin: Would the hon. Gentleman be sympathetic towards a tax on profits made on land values? That surely would not upset any of the criteria which he has mentioned?

Mr. Bruce-Gardyne: I should like to see us trying to tackle the causes of inflation for a change rather than dealing with the symptoms. I confess that that is not conventional wisdom at present. The course of honour and glory at present, in the eyes of many observers of the nation's affairs, lays the emphasis on dealing with the symptoms of inflation, rather than the causes. If we are to do that, something along the lines of what the hon. Member for Loughborough (Mr. Cronin) is talking about would fit in with that pattern. I should rather see us tackling the causes than the symptoms.

Dr. Gilbert: The hon. Gentleman challenges me to offer any tax changes that would fit into this programme. Would he care to discuss the point which I raised—namely, as a result of last year's Budget, interest charges are not deductible and that that is a direct incentive for people to borrow and force up the value of land and homes? That is an incentive to speculate.

Mr. Bruce-Gardyne: I do not want to be dragged too far wide of the amendment. Of all the various suggestions put forward from the Opposition benches, the one which the hon. Gentleman has just mentioned is one with which I find myself least unsympathetic. I do not go beyond that. In general, I put the proposition that it would not be easy to enable us so to restrict the net borrowing requirement in the year ahead by increases of taxation that there was not a pressure to continue with a further and continual rise in interest rates, without coming into conflict with either the overall objectives of the Bill or the objective of encouraging industrial investment, if two objectives are compatible, which I doubt—but that is a matter with which we shall have to deal at another stage.
The amendment is totally incompatible with the requirements of the monetary policy as far as we can see them for the year ahead. That in itself is a more than


adequate reason for rejecting the amendment. It would also be totally incompatible with competition and credit control. I know that there has been a growing volume of opinion among commentators, most of whom are finding that they are having to pay a real rate of interest on their overdrafts for the first time for many years, to the effect that competition and credit control should be thrown into the ash can.
I was relieved to hear a reply from my hon. Friend the Minister of State, Treasury, last week to my hon. Friend the Member for Kingston-upon-Thames (Mr. Norman Lamont), who asked my right hon. Friend the Chancellor of the Exchequer whether he was satisfied with the working of the policy of competition in credit. My hon. Friend the Minister of State said:
Yes, Sir. The changes have resulted in a welcome increase in competition and innovation in the banking sector.'
Further, in answer to my hon. Friend, he said:
… A return to ceilings on bank lending in the private sector would stifle competition and in any event would have severe limitations as a monetary tool."—[OFFICIAL REPORT, 22nd February 1973; Vol. 851, c. 657.]
I was inclined to say "Bravo". I hope we shall hear nothing tonight which will in any way show an indication of wavering from that robust assurance. The amendment is totally incompatible with competition and credit control.

Dr. Gilbert: Dr. Gilbert indicated assent.

Mr. Bruce-Gardyne: I am glad to see that the hon. Gentleman agrees with that. That in itself would be another reason for opposing it. I agree entirely with the sentiments expressed by my hon. Friend the Minister of State.
We are impaled on the horns of a slightly embarrassing dilemma when we are discussing the amendment. The dilemma arises from paragraphs 38 and 40 of the Green Paper, to which the hon. Member for Dudley referred. He rightly pointed out that paragraph 38 says
Prices should be determined so as to secure that net profit margins do not exceed the average level of the best two of the last five years.
He further pointed out that paragraph 40 says

Where the reference level has been exceeded, or where in the light of interim accounts or other evidence it is likely to be exceeded, price reductions … should be made according to the actual or expected excess.
Here we seem to be in a slight difficulty. I agree with the hon. Member for Dudley that the profits of the clearing banks in the year ahead will exceed the reference point. That is very likely. Of course, if the banks are required to abolish their charges, we might even be paid for keeping an account with the banks. However, I have a nasty suspicion that unless we are paid large sums for keeping our accounts with the banks we shall find that the impact of higher interest charges in the year ahead will mean that the banks are over the top of their reference point. What do we do then? It seems that this is a slight embarrassment. The amendment must be rejected.
I am not so clear about what we can do, other than accepting the effect of the amendment, to ensure that the banks conform to paragraph 40. I hope that my hon. Friend will make it clear that paragraph 40 will not under these circumstances apply to the banks. That will be the sensible line for us to take. That will make the policy completely consistent. We shall then have an assurance that the Government will pursue a coherent and responsible monetary policy in the year ahead. But if my hon. Friend the Chief Secretary is not prepared to give that assurance, we shall be left with considerable doubts and anxieties on what the likely course of monetary policy is to be in the years ahead. My hon. Friend must seriously address himself to this dilemma.

6.0 p.m.

Mr. Cronin: I support the new clause so ably moved by my hon. Friend the Member for Dudley (Dr. Gilbert).
The important aspect of the new clause is that it reflects a serious disquiet which is shared by both sides of the House about the high rates of interest prevailing at present. The clause asks the Government to take powers to reduce interest rates. As far as I know, since the First World War we have never had such high rates of interest. This is a symptom of the thoroughly rotten state of the economy under the administration of the present Government.

Mr. Arthur Lewis: It makes sense to the bankers.

Mr. Cronin: Yes. I am grateful to my hon. Friend, but I should like to come to that point later.
We have never previously had a situation in which the equivalent of the minimum lending rate of the bank was 8¾ per cent. Only about a month ago it was 9 per cent. This means in effect that a first-class borrower has to pay 11 per cent. for his borrowings. How can the Government expect any substantial expansion of the economy in those circumstances?
It has been pointed out by my hon. Friend the Member for Dudley that the only gainers from this are the banks. My hon. Friend gave some very useful figures about enormous increases in bank profits. He may not have mentioned the percentage increases. However, last year the National Westminster Bank for instance, increased its profits by 50 per cent. That is an organisation which is supposed to have some degree of public service attached to it, and not to be a pure blight on the economy.
It is disappointing that there is no reference in the Green Paper to bank interest rates except for the rather scanty references at paragraphs 21 and 66.
If I may digress, we have been told that at the top of page 5 there is a misprint, and that the word "not" should be inserted. Will the Chief Secretary give an assurance that there are no similar misprints in the document, no other "nots"? It would be nice to know that a fundamental document of Government policy has been accurately printed and is not full of careless mistakes of this nature. It is extremely difficult to debate a subject such as this when one is suddenly told at the last moment that the word "not" should be inserted and that the opposite is meant.

Mr. Bruce-Gardyne: If the hon. Member consults paragraph 91 on page 16 he will find a not entirely dissimilar instance there.

Mr. Cronin: That is very helpful to know. But no doubt the Chief Secretary will deal with that point.
It is an obvious truism that the high interest rates which we are asking the Government to control will have a deplor-

able effect on capital investment and on the building up of stocks and, therefore, will increase unemployment. We need not develop that point because both sides of the House are enormously and painfully aware of it. An important thing to remember is that these high rates are not having any effect on the property speculator, the pampered child of the Government. As things are going at present, it does not worry a property speculator if he pays even 15 per cent. interest. He knows that in a few months' time he will make 100 per cent. profits. Property speculators will not be affected.
This will affect everyone else, however, who makes a worthwhile contribution to the economy. Most important, of all, it will affect principally the small man. The large borrower, the man in big business, will be able to offset these high interest rates against his taxation. The man who pays a high rate of surtax, or large amounts of tax under the new tax code, will be very much less affected, whereas the smaller man, like the small businesses all of us know in our constituencies, will be much more severely affected by these interest rates which are now so high. Yet the Government have declined so far to take any action to control and to reduce these rates.
Perhaps the Chief Secretary will correct me if I am wrong, but I presume that the Government's reluctance to control interest rates is due to an intention to let them rise as high as possible to cut down the money supply. I do not know whether that is the intention, but I suggest that these high rates would not occur if the Government took some very sensible steps to reduce the inflation on borrowing. If the Chief Secretary could persuade his right hon. Friend the Chancellor of the Exchequer, in this time of national crisis, to take the very sensible step that was taken by my right hon. Friend the Member for Birmingham, Stechford (Mr. Roy Jenkins) when Chancellor, and to ensure that in future the interest paid on borrowings could not be set against taxation as an expense, except in cases where that was particularly helpful in the national interest, that would bring down interest rates enormously. It would not then be necessary for us to demand that the right hon. Gentleman should have some effective form of control.
The other important thing is that there should be some quantitative control of interest rates. One of the maddest things that the Government did at the end of 1971 was to abolish all quantitative controls of interest rates and controls on hire purchase and to cease giving the banks any directions about who should receive loans and who should not. If we had quantitative controls, this would be much more help for the economy and these high interest rates would be unnecessary.
In conclusion, it is essential that the Government should have power to control these high interest rates. At the same time, however, such rates would not be necessary if the Government abandoned their crazy policy of subsidising a demand for credit and at the same time raising its price.

Mr. Biffen: The hon. Member for Loughborough (Mr. Cronin), who is, I suppose, a somewhat fastidious social democrat within the Labour Party, nevertheless committed the solecism of describing our present circumstances as
this time of national crisis.
It would be helpful if in all of these debates we tried somehow to disembarrass ourselves of this almost latter day sense of impending doom.
I was delighted to hear my right hon. Friend the Secretary of State for Trade and Industry on the radio this morning when he put his radio interviewer very firmly in his place when being asked about the nature of the present industrial unrest.
We are living through a period of economic difficulty, although I cannot remember when we were not doing that. Without doubt the present rates of inflation are intolerable and carry in their consequences the destructive elements which are immensely socially harmful as well as possibly economically harmful.
We are now discussing a good-nature tease. It is a good-natured demand by the Opposition—and they are entitled to a tease—to probe some of the frontiers of Government competence in controlling the price mechanism. It is true that we could use this as a debate to examine the balance between expenditure and taxation and the consequence which that balance has for interest rates. However,

I shall not be beguiled into following that line of argument because a much more apt occasion will present itself immediately after 6th March.
This debate highlights the anomalous position of banks. It has been observed to be a lacuna in the legislation and the way in which the legislation will be operated by the Government, which perhaps is even more important than the legislation itself.
My hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) made a splendid speech about the banks and spoke of their opportunity and potential. I felt that here was the Clive Jenkins of the banking world. He had gone through the document and had come to certain conclusions. If we look at paragraph 66 we see
Subject to paragraph 10, all charges of banking enterprises other than interest rates are within the control and the system of allowable cost increases and the limitation on net profit margins apply to them.
The qualifying phrase "other than interest rates" is exactly the sort of material that provides a livelihood for the Clive Jenkins of this world, whether in respect of Threadneedle Street and its immediate surroundings or of the white collar or blue collar unions.
My suspicion is that the blue collar unions will be the last people to recognise these circumstances, but eventually they, too, will appreciate the situation. It is this area of fudge and ambiguity that will give rise progressively through time, as we have these three years in prospect, to a sense of inequity and injustice as one section of the community rather than another can spot areas where they can operate pricing systems more effectively than otherwise would be the case.
The hon. Member for South Angus lighted on the centre point of this debate, which must be the process of learning from my hon. Friend the Chief Secretary to the Treasury where the Government now stand in respect of the Bank of England's competition and credit control. The Green Paper has cast a shadow of doubt on the determination of the Government to stand by that policy. My hon. Friend will be performing an immensely valuable service not merely to the Treasury Bench, of which he is a most distinguished member, but to the banking and financial community generally if he


uses this occasion to say clearly that the Government still stand by the Bank of England's competition and credit control.
6.15 p.m.
Almost inevitably if the Government stand by the competition and credit control, it seems to me to be impossible to foresee circumstances in which the mortgage market does not become affected. I believe that there will be an upward thrust of mortgage rates unless action is taken to prevent that occurring. I am particularly anxious to know the Government's attitude. It puts the building societies in an impossible position if they are unable to compete along with other elements in the banking system for the resources available for lending. We may find ourselves in a situation where there is an artificial shortage of mortgages created because the mortgage market is leaned upon.
I do not suppose that notice will be served under Clause 5. I imagine that it will be part of the process of Government by invitation which was put so succinctly by my right hon. and learned Friend the Minister for Trade and Consumer Affairs earlier this afternoon. Government by invitation is one of the most offensive forms of government that can be undertaken. It is particularly offensive when we live in an age in which, quite properly, we are told that law and order are very important and essential elements in political discussion. I like to feel that the Government feel bound by authority as well as requiring others to abide by it.
Therefore, in the context of a continuation of the Government's adherence to competition and credit control, I hope that the Government will take the opportunity to clarify what they believe will be the degree of independence that will be permitted to building societies. It is clear that there are already gathering day by day further doubts and question marks about the execution of this aspect of Government policy. It is an area in which speedy elucidation is needed.

Mr. John Mackie: I am tempted to my feet by the remark of the hon. Member for Oswestry (Mr. Biffen) that this is a teasing clause. That was a light-hearted remark if ever there were one.
The clause seeks to bring some measure of control over interests rates, and I should like to relate my own experience as a medium borrower in an industry that is seeking to increase production. When my sons and I were considering a project to increase beef production, we discovered that present interest rates precluded us from going ahead with that project. Anybody who has studied the matter will know that there has been a severe fluctuation in the price of beef which has fallen from £22 per cwt. to £18 or £19 per cwt. Admittedly that is still high, but farmers have to make their plans on the basis of present-day prices.
The Chief Secretary to the Treasury said in Committee that his right hon. Friend the Minister of Agriculture would try, through the price review, to bring in some control of farming profits. If that is to be the case, and if at the same time there is to be no control over interest rates, then increases in production will be inhibited. I emphasis once again that this clause is by no means a teasing provision, but is a serious contribution.

Mr. Patrick Jenkin: This debate in a short time has ranged very widely. I shall not take up the remarks of the hon. Member for Enfield, East (Mr. Mackie) on the subject of the problems of farm price reviews and beef prices. The hon. Member for Dudley (Dr. Gilbert) and one or two of my hon. Friends, including my hon. Friend the Member for South Angus (Mr. Bruce-Gardyne), sought to raise budgetary matters—for example, the borrowing requirement and the possibility of tax changes. These are matters about which I must maintain the silence of a Trappist monk. There was also discussion of future movements of interest rates, which is a matter on which Treasury Ministers speculate at their peril. So, for reasons which I am sure the House will understand, I shall have nothing to say on these matters but will confine myself to the narrow but, I concede, important points which the hon. Gentleman raised in moving this new clause.
Two central issues have been mentioned in the debate, arising out of the problem of the high rates of interest which we are at present experiencing; first, the burden of these high rates on the individual borrower and, secondly, the benefit which they mean for the banks


and other financial institutions and the relevance of that benefit to the counter-inflation policy. As the hon. Gentleman recognised, these are two sides of the same coin, and it is the intention of this new clause, by conferring on the Government power to restrict the rates of interest, that both these problems should be dealt with. I must make it clear to the House that I am afraid the new clause is unacceptable and I hope that the House will resist it.
The freedom for interest rates to fluctuate is an essential instrument for the overall management of the economy. If interest rates were controlled in the manner which the hon. Gentleman envisaged in bringing in his new clause the authorities' ability to influence monetary conditions in the country would be severely hampered. It is indeed widely recognised —and has been for some time now, as my hon. Friend the Member for South Angus pointed out—that control of the money stock is essential in the battle against inflation. The new clause, by depriving the authorities of the instrument of control in this regard, would help to defeat the whole purpose of the Bill. In other words, as my hon. Friend the Member for South Angus said, the power which it is sought to give to the Treasury under this new clause is incompatible with the rest of the Government's counter-inflation policy.
I recognise that this is not easy for the man-in-the-street to comprehend. To him, the interest he pays—whether on a mortgage or an overdraft, or through hire purchase—is a price, or a charge. When his income is restricted and he sees other prices and charges being restricted as severely as the newspapers this morning recognise it is the Government's intention to restrict them, he cannot see why this charge should not also be restricted. And especially must this be true at a time when, as has happened in the past few months, the action by the authorities to keep the expansion of the money supply in check has put an upward pressure on all interest rates.

Dr. Gilbert: I understand the Chief Secretary to say that if we tried to set interest rates in any rigid pattern it would be totally impossible to work any monetary policy. This clause is merely an enabling one; it does not set any limits,

or specify types of interest rates. If this is so, can the hon. Gentleman explain why countries such as the United States and Canada, for many years, quite outside the conditions of the economic emergency, have had permanent controls over various types of interest rates? If they can do that, why cannot we?

Mr. Jenkin: I am sure the hon. Gentleman recognises—and I was going to deal with the point—that conditions in other countries, with their various institutional arrangements, are bound to differ. He is quite right: in the American counter-inflation policy they had their committee on interest and dividends, but the experience and the problems of the United States differ in many respects from what we face here. It simply does not follow that because it was right to set up in America a committee of the sort President Nixon set up in connection with his pay and prices policy it would be appropriate to do the same thing here.
What is more significant is that the United States did not, in fact, impose statutory controls on interest rates, and, for reasons which I am coming to and have indeed already adverted to, it would be inappropriate to do so here.
There are other differences. We have taken the view—and I do not think it has been seriously challenged on either side of the House—that in the interests of fairness and in order to be seen to be dealing fairly with all categories of our population, we should introduce a control on dividends, and the House may think it is a pretty stringent control. They have not had a control on dividends in America.

Dr. Gilbert: That is irrelevant.

Mr. Jenkin: The hon. Gentleman may say that is irrelevant, but I think we would have heard in very strong language from him if we had decided not to do it. The fact is that if there is to be control of the incomes of employees and the self-employed, and profit margins, and distribution, we feel it right that at the same time restrictions should be placed on investment income paid in the form of dividends. That is another difference between ourselves and America, because they do not do that.
The ordinary man may well ask how the Government can claim to be fighting


inflation by letting interest rates rise as they have. The short answer is that there is no effective method of controlling monetary aggregates other than the use of interest rates. The hon. Member for Loughborough (Mr. Cronin) invited me to return, as he put it, to some form of quantitative control on lending. I just do not believe that that is right. The quantitative controls on bank lending which were employed for many years, particularly by the party opposite, simply do not represent a viable alternative for the control of monetary aggregates to the movement of interest rates. I entirely agree that they did succeed in holding back certain sorts of lending. They held down bank lending to the private sector by the operation of lending ceilings, but only at the cost of great distortions in the allocation of credit and considerable inefficiencies in our financial system. These grew more and more severe and the anomalies became greater and greater as time went on. Constrained by ceilings, the banks and finance houses had no incentive to go out and compete for business, while borrowers, particularly those in non-priority areas, were forced to seek funds, often at very high cost, from fringe institutions outside the credit control net.

Mr. Cronin: I am sure the hon. Gentleman will at least concede that in the days of the Labour Government there was not this absolutely crazy escalation of land and property prices, brought about by the subsidies given by the Government to the speculators.

Mr. Jenkin: I will answer the hon. Gentleman now; I was coming to it later. In the matter of the tax allowance for interest on borrowing to invest in land, the purchase of land, and the improvement of land and buildings, the rules today are exactly the same, word for word, pound for pound, as they were under the hon. Gentleman's Government. We have not changed by one iota the tax allowance for interest on money borrowed to invest in land purchase or land improvement. All the talk we have had about the allowance helping the land speculators, and so on, comes ill from hon. Gentlemen opposite. The reforms of the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins) left the tax relief for interest on borrowing unchanged, and it stands today as he left it.

Mr. Benn: But the hon. Gentleman will agree that as a result of leaving it as it was, land and property speculation has occurred and, since the Government have changed their own policy several times in the past two-and-a-half years, if they recognise that there has been a link between the existing system—left by the last Government—and what has happened, there is no reason at all why they should not respond by changing the policy.

6.30 p.m.

Mr. Jenkin: If the right hon. Gentleman is suggesting that there should now be a disallowance for tax relief for interest charged on money borrowed by, say, businessmen investing in the buying and selling of land, he should say so. That was never the policy of his party, and it would be a very difficult policy. But we are moving a little wide of the clause—

Mr. Benn: As the hon. Gentleman has challenged me on this, I remind him that one of the matters raised by the TUC in its discussions with the Government was that action should now be taken to deal with the scandal of the rise in land and property values, which is affecting rents and payments for houses by members of the unions. This is not a new or surprising matter, but one that might have some bearing on the prospects of reaching a voluntary agreement.

Mr. Jenkin: I am sure that the right hon. Gentleman realises that this is not the time to refer at greater length to paragraph 23 of the counter-inflation White Paper of January, in which we said that the Government
intend, before the next stage of the policy comes into operation, to bring forward proposals which will increase the availability of building land and reduce the extent to which it is possible for people to make disproporionately high profits from transactions in land.
I must ask the right hon. Gentleman to await the appropriate announcement from my right hon. Friend.
I return to the question of the money supply and the path that the hon. Member for Loughborough was asking me to re-tread. There is no evidence that in the longer term the imposition of lending ceilings had much impact on the growth of the money supply. Their main effect


was to alter the channels by which the market supplied money, and the money often flowed in a much less efficient way. If the demand for money exists the supply will usually be forthcoming by one means or another. If the banks are forbidden to satisfy the demand the public will try to find other ways, perhaps by selling gilt-edged stock or going to fringe institutions.
We saw under the previous Government the kind of thing that happens. If the authorities go into the market to purchase debt in an effort to prevent interest rates from rising, their actions simply provide the money that ceilings prevented the banks from making available. There cannot be much sense in that.
I think that it is widely agreed, not only on the Government side, that the fundamental changes in the techniques of monetary supply that we made in 1971 have led to a much sharper and more competitive approach in the financial system, which has been of general benefit to the whole economy. Important and far-reaching structural changes have occurred in the past year or so as the banks have come to play a much greater rôle in channelling funds through the economy. Part of the big increase in bank lending to the private sector has been an inevitable catching-up process after years of rigid controls which had greatly distorted the allocation of credit.
I can respond to the requests of my hon. Friends the Members for Oswestry (Mr. Biffen) and South Angus by assuring the House that it is not our intention, by resorting to quantitative restrictions, to throw away the striking gains in the efficiency of the financial sector that have been achieved under the new arrangements. That would be a retrograde step, and one that would not avoid the need for high interest rates if an excessively rapid growth in the money supply is to be reduced.
But that is not to say that there should be a free-for-all in the allocation of credit under the new system. We reserved the right to give qualitative guidance to the banks from time to time as we felt necessary. Last August, as the demand for funds from industry started to pick up, we reminded the banks of the importance of satisfying the needs of industrial borrowers and asked that they

should, as necessary, curb their lending to property companies and for financial transactions.
The banks are very conscious of their responsibilities in this regard, and as financial conditions have tightened in the past few months there are indications that they have been cutting back on other types of lending, particularly for the purposes mentioned in the guidance. With the system of overdraft facilities in this country, the effects of that process take time to show up in the figures, but they will become more evident as existing facilities fall due for renewal.
No one—least of all the Government —wants to see interest rates at a high level. The key to lower interest rates lies in the success of our efforts to curb inflation. That in turn requires that the growth of the money supply be kept in check. If we are to achieve that, interest rates must remain free to fluctuate.

Mr. Bruce-Gardyne: How does my hon. Friend reconcile paragraphs 38 and 40 of the White Paper with the consequences for bank profits of the exemption of interest from control?

Mr. Jenkin: Every hon. Member who has spoken has raised the question of the banks' profits—the other side of the coin. What effect will the high interest rates have on the banks' profits, and what are the implications for stage 2 of the counter-inflation policies? A number of hon. Members have referred to paragraph 66 of the Green Paper, where we make it clear that charges of all sorts—fees, commissions, bank charges and so on—are within the ambit of control by the Price Commission. They are subject to the regime of allowable cost increases and to the profit margin control. If those margins are exceeded, not only will no increases in the charges be allowed, but there will be power under the Bill for the Price Commission to order reductions.
However, as will be apparent to anyone who read Michael Blanden's perceptive article in the Financial Times this morning, the operation of the controls in relation to banks is not straightforward. There are problems of definition and control. Mr. Blanden mentioned in particular the problem of how to define the turnover of a bank. Here it is


essential that the Government should take the opportunity of the publication of the Green Paper, which is a consultative document, to consult the banks and the finance houses on the precise application of the controls in their sector.
But I must make it clear that it is our intention, so far as it lies within our power, to ensure that the banks and other financial institutions are not excluded from the limits that apply to the rest of the economy, and that the Price Commission should be able to exercise its powers under the Bill to implement the code in relation to the banks and financial institutions.

Mr. Peter Hordern: Can my hon. Friend confirm that no measures will be taken with regard to the banks other than those mentioned in the Green Paper?

Mr. Jenkin: I cannot be as specific as my hon. Friend would have me be, because we are to consult the banks, the finance houses and other bodies, and I do not want to tie the hands of the Government and those who will carry out the consultations in deciding the best way to achieve the purpose I have just outlined.
However, it would not be compatible with the rest of our counter-inflation policy to seek to control interest rates, for they must be free to fluctuate as required for the overall management of demand, which is an essential element in the control of inflation.
The new clause is not only inconsistent with the rest of the counter-inflation policy; it is unnecessary to achieve one of the objects of that policy—to subject bank profit margins to the same sort of strict regime as that applicable to other enterprises.
Therefore, I ask the House to reject the clause.

Dr. Gilbert: With the leave of the House, I should like to reply briefly.
Paragraph 66 of the Green Paper says:
Subject to paragraph 10, all charges by banking enterprises other than interest rates are within the control …".
One of the first things the Chief Secretary could do with regard to that paragraph is to make sure that the banks publish their charges. We should all be better off.
The hon. Gentleman might also force all the banks to publish true financial statements. The last answer I received to a Question on the subject showed that about 90 still refused to disclose their true profits. That is another step forward that the hon. Gentleman might take in his discussions with the banks.
I welcome what the Chief Secretary said about consultations with the banks but I cannot accept his airy dismissal of the way in which things are done in other countries as being totally unsuitable for trying to control inflation here. I refer him to page 46 of the report of the Cost of Living Council of the United States for the period 1st January-31st March 1972, where it is said that the council had determined that:
the issuance of mandatory regulations and orders providing for the stabilization of interest rates and finance charges is not necessary at this time"—
that is not surprising, because American interest rates are much lower than ours—
to maintain such rates and charges at levels consonant with economic growth.
In the United States they have powers to set mandatory limits to interest rates. There is no reason why this Government should be so reluctant to take such powers. The man in the street finds it difficult to understand their continued tenderness to the banks.
Later on the same page of that report it is said that
Several large banks, in announcing increases in the prime rate, stated explicitly that they were not increasing consumer loan or mortgage loan rates.
It would be nice to have some assurance that that would be the result of the consultations which the hon. Gentleman intends to have with the banks. The report also says that
the Committee on Interest and Dividends has met with representatives of the commercial banking industry …. with a view toward discovering obstacles to lower rates and to the avoidance of future rate increases.
The only things not controlled in the Bill or the code are bank interest rates and bank profits. Difficulties of definition apart, we absolutely reject that philosophy. We say that just because there is difficulty of definition, and so on, it is that more important to act on interest rates.
I have no hesitation in asking my hon. and right hon. Friends to divide the House in support of this new clause.

Question put, That the clause be read a Second time:—

The House divided: Ayes 218, Noes 282.

Division No. 68.]
AYES
[6.42 p.m.


Abse, Leo
Griffiths, Will (Exchange)
Oram, Bert


Allaun, Frank (Salford, E.)
Hamilton, James (Bothwell)
Orbach, Maurice


Archer, Peter (Rowley Regis)
Hamilton, William (Fife, W.)
Orme, Stanley


Ashley, Jack
Hannan, William (G'gow, Maryhill)
Owen, Dr. David (Plymouth, Sutton)


Atkinson, Norman
Hardy, Peter
Padley, Walter


Barnett, Guy (Greenwich)
Harrison, Walter (Wakefield)
Palmer, Arthur


Barnett, Joel (Heywood and Royton)
Hart, Rt. Hn. Judith
Pardoe, John


Beaney, Alan
Hattersley, Roy
Parker, John (Dagenham)


Benn, Rt. Hn. Anthony Wedgwood
Heffer, Eric S.
Parry, Robert (Liverpool, Exchange)


Bidwell, Sydney
Howell, Denis (Small Heath)
Pavitt, Laurie


Blenkinsop, Arthur
Huckfield, Leslie
Peart, Rt. Hn. Fred


Boardman, H. (Leigh)
Hughes, Rt. Hn. Cledwyn (Anglesey)
Perry, Ernest G.


Booth, Albert
Hughes, Robert (Aberdeen, N.)
Prentice, Rt. Hn. Reg.


Bottomley, Rt. Hn. Arthur
Hughes, Roy (Newport)
Prescott, John


Boyden, James (Bishop Auckland)
Hunter, Adam
Price, William (Rugby)


Bradley, Tom
Irvine, Rt. Hn. Sir Arthur (Edge Hill)
Probert, Arthur


Broughton, Sir Alfred
Janner, Greville
Rees, Merlyn (Leeds, S.)


Brown, Hugh D. (G'gow, Provan)
Jay, Rt. Hn. Douglas
Rhodes, Geoffrey


Buchan, Norman
Jeger, Mrs. Lena
Richard, Ivor


Butler, Mrs. Joyce (Wood Green)
Jenkins, Hugh (Putney)
Roberts, Albert (Normanton)


Callaghan, Rt. Hn. James
Jenkins, Rt. Hn. Roy (Stechford)
Roberts, Rt. Hn. Goronwy (Caernarvon)


Cant, R. B.
John, Brynmor
Roderick, Caerwyn E.(Brc'n&amp;R'dnor)


Carmichael, Neil
Johnson, James (K'ston-on-Hull, W.)
Rodgers, William (Stockton-on-Tees)


Carter, Ray (Birmingh'm, Northfield)
Johnson, Walter (Derby, S.)
Rose, Paul B.


Carter-Jones, Lewis (Eccles)
Jones, Barry (Flint, E.)
Ross, Rt. Hn. William (Kilmarnock)


Castle, Rt. Hn. Barbara
Jones, Dan (Burnley)
Rowlands, Ted


Clark, David (Colne Valley)
Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)
Sandelson, Neville


Cocks, Michael (Bristol, S.)
Jones, Gwynoro (Carmarthen)
Sheldon, Robert (Ashton-under-Lyne)


Cohen, Stanley
Jones, T. Alec (Rhondda, W.)
Shore, Rt. Hn. Peter (Stepney)


Concannon, J. D.
Judd, Frank
Short, Mrs. Renée (W'hampton, N.E.)


Corbet, Mrs. Freda
Kaufman, Gerald
Silkin, Rt. Hn. John (Deptford)


Cox, Thomas (Wandsworth, C.)
Kelley, Richard
Silkin, Hn. S. C. (Dulwich)


Crawshaw, Richard
Kinnock, Neil
Sillars, James


Cronin, John
Lambie, David
Silverman, Julius


Crosland, Rt. Hn. Anthony
Lamborn, Harry
Skinner, Dennis


Crossman, Rt. Hn. Richard
Lawson, George
Small, William


Cunningham, G. (Islington, S.W.)
Lee, Rt. Hn. Frederick
Smith, John (Lanarkshire, N.)


Darling, Rt. Hn. George
Lestor, Miss Joan
Spearing, Nigel


Davidson, Arthur
Lewis, Arthur (W. Ham, N.)
Spriggs, Leslie


Davies, Denzil (Llanelly)
Lewis, Ron (Carlisle)
Stailard, A. W.


Davies, Ifor (Gower)
Lipton, Marcus
Steel, David


Davis, Clinton (Hackney, C.)
Lomas, Kenneth
Stewart, Rt. Hn. Michael (Fulham)


Davis, Terry (Bromsgrove)
Lyon, Alexander W. (York)
Stoddart, David (Swindon)


Deakins, Eric
Lyons, Edward (Bradford, E.)
Stonehouse, Rt. Hn. John


de Freitas, Rt. Hn. Sir Geoffrey
Mabon, Dr. J. Dickson
Strang, Gavin


Delargy, Hugh
McBride, Neil
Strauss, Rt. Hn. G. R.


Dell, Rt. Hn. Edmund
McCartney, Hugh
Summerskill, Hn. Dr. Shirley


Dempsey, James
McGuire, Michael
Swain, Thomas


Douglas, Dick (Stirlingshire, E.)
Mackenzie, Gregor
Thomas, Rt. Hn. George (Cardiff, W.)


Douglas-Mann, Bruce
Mackie, John
Thomas, Jeffrey (Abertillery)



McNamara, J. Kevin
Thorpe, Rt. Hn. Jeremy


Driberg, Tom
Mahon, Simon (Bootle)
Tomney, Frank


Duffy, A. E. P.
Mallalieu, J. P. W. (Huddersfield, E.)
Torney, Tom


Dunn, James A.
Marks, Kenneth
Tuck, Raphael


Eadie, Alex
Marquand, David
Varley, Eric G.


Edelman, Maurice
Marshall, Dr. Edmund
Wainwright, Edwin


Edwards, Robert (Bilston)
Mason, Rt. Hn. Roy
Walden, Brian (B'm'ham, All Saints)


Edwards, William (Merioneth)
Mayhew, Christopher
Walker, Harold (Doncaster)


Ellis, Tom
Meacher, Michael
Wallace, George


English, Michael
Mendelson, John
Weitzman, David


Evans, Fred
Mikardo, Ian
Wellbeloved, James


Faulds, Andrew
Millan, Bruce
Whitehead, Phillip


Fisher, Mrs. Doris (B'ham, Ladywood)
Miller, Dr. M. S.
Whitlock, William


Fitch, Alan (Wigan)
Milne, Edward
Willey, Rt. Hn. Frederick


Fletcher, Raymond (Ilkeston)
Mitchell, R. C. (S'hampton, Itchen)
Williams, Alan (Swansea, W.)


Ford, Ben
Molloy, William
Williams, Mrs. Shirley (Hitchin)


Forrester, John
Morgan, Elystan (Cardiganshire)
Williams, W. T. (Warrington)


Fraser, John (Norwood)
Morris, Alfred (Wythenshawe)
Wilson, Alexander (Hamilton)


Freeson, Reginald
Morris, Charles R. (Openshaw)
Wilson, Rt. Hn. Harold (Huyton)


Galpern, Sir Myer
Morris, Rt. Hn. John (Aberavon)
Wilson, William (Coventry, S.)


Gilbert, Dr. John
Mulley, Rt. Hn. Frederick



Ginsburg, David (Dewsbury)
Murray, Ronald King
TELLERS FOR THE AYES:


Golding, John
Oakes, Gordon



Grant, John D. (Islington, E.)
O'Halloran, Michael
Mr. Donald Coleman and


Griffiths, Eddie (Brightside)
O'Malley, Brian
Mr. Tom Pendry.




NOES


Adley, Robert
Fox, Marcus
McNair-Wilson, Patrick (New Forest)


Alison, Michael (Barkston Ash)
Fraser, Rt. Hn. Hugh (St'fford &amp; Stone)
Maddan, Martin


Allason, James (Hemel Hempstead)
Fry, Peter
Madel, David


Amery, Rt. Hn. Julian
Galbraith, Hn. T. G. D
Maginnis, John E.


Archer, Jeffrey (Louth)
Gardner, Edward
Marples, Rt. Hn. Ernest


Astor, John
Gibson-Watt, David
Marten, Neil


Atkins, Humphrey
Gilmour, Ian (Norfolk, C.)
Mather, Carol


Awdry, Daniel
Gilmour, Sir John (Fife, E.)
Maude, Angus


Baker, Kenneth (St. Marylebone)
Glyn, Dr. Alan
Mawby, Ray


Baker, W. H. K. (Banff)
Godber, Rt. Hn. J. B
Maxwell-Hyslop, R. J.


Balniel, Rt. Hn. Lord
Goodhart, Philip
Miscampbell, Norman


Batsford, Brian
Goodhew, Victor
Mitchell, Lt.-Col.C. (Aberdeenshire, W)


Beamish, Col. Sir Tufton
Gorst, John
Mitchell, David (Basingstoke)


Bell, Ronald
Gower, Raymond
Moate, Roger


Bennett, Sir Frederic (Torquay)
Grant, Anthony (Harrow, C.)
Molyneaux, James


Bennett, Dr. Reginald (Gosport)
Gray, Hamish
Money, Ernie


Benyon, W.
Green, Alan
Monks, Mrs. Connie


Berry, Hn. Anthony
Grieve, Percy
Montgomery, Fergus


Biffen, John
Griffiths, Eldon (Bury St. Edmunds)
More, Jasper


Biggs-Davison, John
Grylls, Michael
Morgan-Giles, Rear-Adm.


Blaker, Peter
Gummer, J. Selwyn
Morrison, Charles


Boardman, Tom (Leicester, S.W.)
Gurden, Harold
Mudd, David


Body, Richard
Hall, Miss Joan (Keighley)
Murton, Oscar


Boscawen, Hn. Robert
Hall, John (Wycombe)
Nabarro, Sir Gerald


Bossom, Sir Clive
Hail-Davis, A. G. F.
Neave, Airey


Bowden, Andrew
Hamilton, Michael (Salisbury)
Nicholls, Sir Harmar


Braine, Sir Bernard
Hannam, John (Exeter)
Noble, Rt. Hn. Michael


Bray, Ronald
Harrison, Brian (Maldon)
Normanton, Tom



Harrison, Col. Sir Harwood (Eye)
Nott, John


Brinton, Sir Tatton

Onslow, Cranley


Brocklebank-Fowler, Christopher
Haselhurst, Alan
Oppenheim, Mrs. Sally


Brown, Sir Edward (Bath)
Hastings, Stephen
Orr, Capt. L. P. S.


Bruce-Gardyne, J.
Havers, Sir Michael
Osborn, John


Bryan, Sir Paul
Hayhoe, Barney
Owen, Idris (Stockport, N.)


Buchanan-Smith, Alick (Angus, N&amp;M)
Heseltine, Michael
Page, Rt. Hn. Graham (Crosby)


Buck, Antony
Hicks, Robert
Page, John (Harrow, W.)


Bullus, Sir Eric
Higgins, Terence L.
Parkinson, Cecil


Burden, F. A.
Hiley, Joseph
Peel, Sir John


Campbell, Rt. Hn. G. (Moray &amp; Nairn)
Hill, John E. B. (Norfolk, S.)
Percival, Ian


Carlisle, Mark
Hill, S. James A. (Soulhamplon, Test)
Peyton, Rt. Hn. John


Carr, Rt. Hn. Robert
Holland, Philip
Pink, R. Bonner


Channon, Paul
Holt, Miss Mary
Pounder, Rafton


Chapman, Sydney
Hordern, Peter
Price, David (Eastleigh)


Chichester-Clark, R.
Hornby, Richard
Prior, Rt. Hn. J. M. L.


Churchill, W. S.
Hornsby-Smith, Rt. Hn. Dame Patricia
Proudfoot, Wilfred


Clark, William (Surrey, E.)
Hunt, John
Pym, Rt. Hn. Francis


Clegg, Walter
Hutchisen, Michael Clark
Raison, Timothy


Cockeram, Eric
Iremonger, T. L.
Ramsden, Rt. Hn. James


Cooke, Robert
Irvine, Bryant Godman (Rye)
Rawlinson, Rt. Hn. Sir Peter


Coombs, Derek
James, David
Redmond, Robert


Cooper, A. E.
Jenkin, Patrick (Woodford)
Reed, Laurance (Bolton, E.)


Corfield, Rt. Hn. Sir Frederick
Jennings, J. C. (Burton)
Rees, Peter (Dover)


Cormack, Patrick
Jessel, Toby
Rees-Davies, W. R.


Costain, A. P.
Johnson Smith, G. (E. Grinstead)
Rhys Williams, Sir Brandon


Critchley, Julian
Jones, Arthur (Northants, S.)
Ridley, Hn. Nicholas


Crouch, David
Jopling, Michael
Ridsdale, Julian


Crowder, F. P.
Joseph, Rt. Hn. Sir Keith
Rippon, Rt. Hn. Geoffrey


d'Avigdor-Goldsmid, Sir Henry
Kellett-Bowman, Mrs. Elaine
Roberts, Michael (Cardiff, N.)


d'Avigdor-Goldsmid, Maj.-Gen. Jack
Kilfedder, James
Roberts, Wyn (Conway)


Dean, Paul
King, Tom (Bridgwater)
Rodgers, Sir John (Sevenoaks)


Deedes, Rt. Hn. W. F.
Kinsey, J. R.
Rossi, Hugh (Hornsey)


Digby, Simon Wingfield
Kirk, Peter
Rost, Pater


Dixon, Piers
Kitson, Timothy
Russell, Sir Ronald


Dodds-Parker, Sir Douglas
Knight, Mrs. Jill
St. John-Stevas, Norman


Drayson, G. B.
Knox, David
Scott, Nicholas


du Cann, Rt. Hn. Edward
Lambton, Lord
Scott-Hopkins, James


Dykes, Hugh
Lamont, Norman
Shaw, Michael (Sc'b'gh &amp; Whitby)


Eden, Rt. Hn. Sir John
Lane, David
Shelton, William (Clapham)


Edwards, Nicholas (Pembroke)
Langford-Holt, Sir John
Simeons, Charles


Elliot, Capt. Walter (Carshalton)
Le Marchant, Spencer
Sinclair, Sir George


Elliott, R. W. (N'c'tle-upon-Tyne, N.)
Lewis, Kenneth (Rutland)
Skeet, T. H. H.


Emery, Peter
Lloyd, Ian (P'tsm'th, Langstone)
Soref, Harold


Eyre, Reginald
Longden, Sir Gilbert
Speed, Keith


Farr, John
Loveridge, John
Spence, John


Fenner, Mrs. Peggy
Luce, R. N.
Sproat, Iain


Fidler, Michael
McAdden, Sir Stephen
Stainton, Keith


Finsberg, Geoffrey (Hampstead)
MacArthur, Ian
Stanbrook, Ivor


Fisher, Nigel (Surbiton)
McCrindle, R. A.
Stewart-Smith, Geoffrey (Belper)


Fletcher-Cooke, Charles
McLaren, Martin
Stodart, Anthony (Edinburgh, W.)


Fookes, Miss Janet
Maclean, Sir Fitzroy
Stoddart-Scott, Col. Sir M.


Fortescue, Tim
McMaster, Stanley
Stokes, John


Foster, Sir John
Macmillan, Rt. Hn. Maurice (Farnham)
Stuttaford, Dr. Tom


Fowler, Norman
McNair-Wilson, Michael
Sutcliffe, John







Tapsell, Peter
Turton, Rt. Kn. Sir Robin
White, Roger (Gravesend)


Taylor, Sir Charles (Eastbourne)
van Straubenzee, W. R.
Wiggin, Jerry


Taylor, Frank (Moss Side)
Vaughan, Dr. Gerard
Wilkinson, John


Taylor, Robert (Croydon, N.W.)
Vickers, Dame Joan
Winterton, Nicholas


Tebbit, Norman
Waddington, David
Wolrige-Gordon, Patrick


Temple, John M.
Walder, David (Clitheroe)
Woodnutt, Mark


Thatcher, Rt. Hn. Mrs. Margaret
Walker-Smith, Rt. Hn. Sir Derek
Worsley, Marcus


Thomas, Rt. Hn. Peter (Hendon, s.)
Wall, Patrick
Wylie, Rt. Hn. N. R.


Thompson, Sir Richard (Croydon, s.)
Walters, Dennis
Younger, Hn. George


Tilney, John
Ward, Dame Irene



Trafford, Dr. Anthony
Warren, Kenneth
TELLERS FOR THE NOES:


Trew, Peter
Weatherill, Bernard
Mr. Kenneth Clarke and


Tugendhat, Christopher
Wells, John (Maidstone)
Mr. Paul Hawkins.

Question accordingly negatived.

New Clause 5

DISPLAY OF PRICES

'The Minister shall by order provide that any person engaged in the sale of goods or the performance of services in the course of business must display to the public a complete list of all prices and charges both current and on the date when this part of this Act came into force'.—[Mr. Pardoe.]

Brought up, and read the First time.

Mr. John Pardoe: I beg to move, That the clause be read a Second time.

Mr. Deputy Speaker (Sir Robert Grant-Ferris): We shall take at the same time Amendment No. 56, standing in the name of the right hon. Member for Blackburn (Mrs. Castle) and the names of her right hon. and hon. Friends, in Clause 6, page 5, line 21, at end insert—
'(6) The Prices Commission may by order instruct retail establishments to display prominently a notice giving details of the address to which customers may refer complaints of price increases for investigation'.

Mr. Pardoe: I do not claim that new Clause 5 is necessarily in perfect form, but I hope that the Government will take note of the idea enshrined in it and will be prepared to accept that idea. To my way of thinking, if a prices and incomes policy is to work it has to do so at two levels—by means of direct intervention by the Government through control, and by means of a psychological impact, particularly working on people's expectations of inflation. New Clause 5 is designed to help along the whole process of stopping those expectations rising and also to keep the people informed how the policy is working.
It is a simple idea, which the American policy had from an early date. Basically, the idea is that every store of any size should have displayed for the benefit of

the public a list of current prices and those which were current when this part of the Bill came into force. Thereby, throughout phase 2 the housewife could see exactly what effect the controls introduced by the Government were having on the goods she wished to buy. She would be able to see by how much they had increased in price, if they had increased, and whether there had been any decreases.
This was an essential part of the American prices and incomes policy, because it was seen early on in the planning of the policy that unless one could enlist the support of ordinary shoppers on behalf of the policy one had not a hope of stopping prices from rising. Indeed, at an early stage the American boards directed that the ceiling prices which had been set at the beginning should be available for public inspection at the point of sale. That had to be done from 1st November 1971. It was stated that they did not necessarily have to be on display, although it was recommended that they should be. The basic point was that price lists were there and that a person who wanted to see what had happened to the price of a product between the time the policy came into force and when he wanted to buy it was able to do so.
Later on, it was stipulated that retail stores with an annual turnover of 200,000 dollars or more would be required to display base period prices. That was from 17th January 1972, so the American Government confirmed and toughened the requirement by stipulating that stores must display these price lists and not merely have them ready for inspection.
This is a simple idea. It does not seem to me to impose a great burden on the larger shops. Admittedly, new Clause 5 would apply to all stores, and the Government may feel that they should exempt some of the smaller stores in the same


way as the American Government did. That is up to them. But I see no reason why the Government should not be prepared to accept the idea enshrined in the new clause and I hope that they will do so. Unless we can conscript the housewife—the ordinary shopper—on behalf of the whole idea of prices and incomes control through this sort of measure in the shops at the point of sale, I do not believe that we have any hope of getting a price control policy at all.

Mr. Sydney Chapman: The hon. Member for Cornwall, North (Mr. Pardoe) has raised an interesting point. My first reaction is that although his suggestion may have been relevant and valid in the United States there is a fundamental difference in this country. New Clause 5 misses the point. One of the most fundamental changes in the prices of goods and services will be through the introduction, in five weeks' time, of value add tax, replacing selective employment tax and purchase tax. There will be quite a movement in prices. Many will stay the same, many will go up and many will come down.
I am disappointed that the Government have not seen fit to accept a suggestion which I, and no doubt many others, have made—that where there is going to be a price change in goods or services on 1st April the extent of that change which has come about through the new tax system should be clearly marked. That would be of much greater help to the consumers—the housewives in particular—than the proposal in new Clause 5.
The consumer has never been so discerning. There are two main reasons for this—an unhappy one, and another. The unhappy one is that we have been living through almost rampant inflation for five years. The fact that prices have risen relatively by so much has made the housewife that much more careful and that much more knowledgeable, for strict economic reasons, about the prices of goods and services.
7.0 p.m.
The second reason is that it is true to say that housewives have been bombarded by the mass media in recent weeks. It is almost as if each housewife has acquired her own built-in consumer council kit. They know much better than

some hon. Members in this House the day-to-day movements in prices. My point is simply that no matter how discerning, how intelligent, not even the most academically distinguished person could possibly have at his finger tips a knowledge of the complex movement in prices there will be as a result of the introduction of VAT.
For example, I am told that if a person buys a refrigerator of under 12 cubic feet capacity on 1st April the price is likely to be reduced by 10 per cent. If it is over 12 cubic feet capacity it is likely to increase by 10 per cent. What I ask is that such an article at present on the market at, say £50, should after the introduction of VAT have the price "£50" crossed out and there should be written the words "less £4 VAT—price for sale £46". The same should apply to prices which have increased.
In striking a blow at the problems of pollution and population the Government are ensuring that the cost of cots and prams rise as a result of VAT. Whatever the change in price may be—it is a matter of little concern to me as a batchelor—the increase ought to be clearly marked so that the consumer, the expectant mother or the successful housewife or whatever will know that she has not been diddled by the manufacturer or retailer. If a 20p tube of toothpaste decreases in price by 1p that should be clearly marked on the price ticket. I do not believe that the Government's answer to this holds water.
Of course there will be this famous shoppers' guide which the Under-Secretary of State for Trade and Industry announced in reply to a Question of mine in the House yesterday. Of course the Government will continue to monitor price increases. The sort of proposal I am putting forward will be such more beneficial and I hope that even though there is less than five weeks to go before the introduction of VAT the Government will have second thoughts.
Amendment No. 56 deals with the address to which complaints should be sent. I have no particular views about this. Most people will know where to make a complaint. From a public relations point of view I would have thought that it was in the interests of retailers to display these notices, but I


do not think it should be a statutory requirement.

Mr. Benn: I hope that the Chief Secretary will not be misled, by the relatively thin attendance or the fact that few hon. Members have spoken, into believing that this is not an important amendment. It is an amendment which, somewhat surprisingly, brings together the three parties in the House represented by possibly the only three speakers who will be taking part in this debate before the Minister replies. It is often my impression, listening to debates on economic matters, and notably to some erudite speeches math on rates of interest, profit ratios and profit margins, that we sometimes forget that for the shoppers—and I do not mean only the housewife, because men shop too—these considerations pass entirely over their heads.
Shoppers want to know whether prices have risen, and if so, why and where. We often forget that it is upon their confidence in any policy that a great deal depends. The housewife is being beseiged by a great deal of conflicting information given by the media and the Government. The Government's argument is that there is a freeze in operation. That is the information the housewife gets from Ministers. Her experience when she goes into the shops is that there is not a freeze on at all.
Let me take the increase in food prices from November to mid-January: they rose by 3½ per cent. If we go back over the last two years we see that they have increased by 27 per cent. Increases in fresh food prices since 6th November amount to l4·7 per cent. Frozen food prices have increased by 5·8 per cent. and all food prices by 7·3 per cent. On the one hand the housewife is told, "We are going through a period of freeze", yet on the other hand she is paying higher prices.
She is often also told by the shopkeeper to buy before VAT comes in, yet we do not know at what rate VAT will be levied and we cannot know what effect phase 2 will have on prices in the shops because under phase 2 the Price Commission, not yet set up, will have the power to consider applications for price increase, to approve them and to make orders to keep prices down. The Minister has the power at some stage to

overturn the Prices Commission. In the midst of all this confusion all that the shopper wants to know is what is the price and what it was before the changes occurred.
On Monday the Minister said that the Government would be producing a handy guide, which presumably one can carry about in a pocket. It is to give a broad indication of what might or should be happening to detergents or washing machines, or whatever else people buy. To suppose that it will be a help to the shopper is an illusion. In practice, when a shopper enters a shop there is such an enormous range of products that it will be impossible to pull out this guide and refer to an average expected increase. What is required is that the relevant information should be on the label.
If this is done the shopkeeper is under some pressure from the shopper who is armed with some information which will enable him to know whether he is being overcharged. This is of special importance because the Chief Secretary, in our debates in Standing Committee H, was candid with the Committee in explaining how the price control worked. He said:
I entirely agree with those who have asked how on earth a Price Commission, comprising no more than 400 or 450 people, could possibly control one-and-a-half million traders. It will not even try to do so. What it will do is effectively to police the big firms, monitor the medium-sized firms and let the forces of competition, which are very real among small firms, ensure that price stability is effective."—[OFFICIAL REPORT, Standing Committee H, 8th February 1973; c. 422.]
That was a candid answer, such as the Chief Secretary always gives to the House and Committee.
Let me underline the key words. The hon. Gentleman said that the Price Commission would not even try to police prices; that it could not try to do so. Unless we can harness the knowledge and self-interest of the person who goes to buy products from the shops to some form of policing, this will be ineffective. It is no good saying that competition will solve the problem, because without the new price on the label the shopper will not know why the price has increased and whether the shopkeeper is taking advantage of VAT.
I hope that in considering their attitude to the amendment the Government


will give serious consideration to the benefits it would bring to the people whose confidence has to be won by this policy on the prices side if there is to be any measure of co-operation, as the Government are supposed to want, with other aspects of their policy.
With the new clause we are discussing Amendment No. 56, which would enable people who go into the shops to know to whom they can make their complaints.
I do not take the view that this process is very easy for people. Theoretically, they should know the address of the Department of Trade and Industry, and they should know about the weights and measures officials, but in practice they do not. When people go into a shop and think that a price has increased unduly, they should at that moment be able to see to whom they should make their complaint.
The Government have made it clear in the drafting of the Bill that they do not believe they can police price increases unless they have access to a mass of information, which they propose to extract from firms by law.
Clause 12—which we debated in Committee and shall debate again with the Government amendment some time today or tomorrow—makes it clear that the Government regard the supply of accurate detailed up-to-date information as an essential ingredient for their own policing of price increases.
That being so, how can the shoppers know anything at all unless they are given the basic information, "What did it cost before; what does it cost today?".
Given that we have had three speeches only, but that they have represented the three parties, I hope the Minister will give serious consideration to the amendment, which I commend to the House.

Mrs. Barbara Castle: Amendment No. 56 is so simple in purpose and administratively that I am confident the Government will accept it.
Everybody knows that the operation of effective price controls can be difficult and complicated. To rely on the weights and measures inspectors is to pin hopes on already overworked men. In the British housewife the Government have to hand perhaps the most impassioned policeman of all when she goes into a

shop, as she does today, and finds that mysteriously, inexplicably, and apparently in contradiction with the Government's policy, the price of an article has risen in a matter of days. The present mood of housewives when they go through this experience is one of bitter frustration, of which the Government would be well advised to take note.
At this time, when there is supposed to be a freeze, prices are rising. A few days ago I had an opportunity to talk to a number of housewives in the shopping precinct in Lincoln. Every one of them had some example to give me of an article the price of which had increased in a matter of days in the major chain stores of the town. When I spoke to them, they just said, "But what can we do?" I replied, "Well, why don't you complain?" and they said, "Where?" Even Members of Parliament are sometimes at a loss to tell a person in a particular area just where he or she should complain.
My experience in Lincoln inspired me to support, and add my name to, the amendment. Indeed, I suggested it to my hon. and right hon. Friends who are associated with it. I cannot imagine anything that would do more to inspire the housewife's confidence that she could do something about rising prices than this very simple proposition that I support today.
Imagine the housewife going into Tesco's, Woolworths or Mothercare and finding, in contradiction to everything the Government may say, that within a matter of a week she is faced with a mysterious price increase. If in those premises there were a notice giving her a name, address and telephone number to which she could apply immediately with her complaint, she would at least feel that she could try to do something. What is more, I suggest to the Government that this is a very good way of making some manufacturers and retailers stop and think. At present they are getting away with unjustified increases, despite the freeze, because they know that they alone have the key to the complicated mystery of what is authorised and what is unauthorised, what the Government may have allowed because of raw material price increases, or what may be the complicated elements


of tax deducted or tax added to a particular price. The manufacturers and retailers are the masters of the situation, because they are the masters of the mystery. Naturally they will abuse the situation when faced with a housewife who feels totally helpless and incapable of influencing what she is expected to accept.
7.15 p.m.
The Government must recognise that at present they can offer the country no simple price formula. There are qualifications here, and things allowed there and not allowed somewhere else. The housewife will feel that she can act only if she can at the very least get at somebody quickly with a demand that her complaint be investigated. That having been done, if the agency—whether it be a weights and measures inspector or someone else—does not at least produce an explanation to which the housewife is entitled she has something she can take up in a wider sphere—something about which she can write to the local newspapers or to her Member of Parliament.
Members of Parliament are inundated at present with complaints about price changes that nobody can justify or understand, but by the time the complaints come to us it may be too late. The housewife may not have the invoice; she may have forgotten the exact day she made the purchase; she may have forgotten the exact pennies and halfpennies that were added to the previous price. But if she can act quickly and register a complaint, then something is on the record that everybody anxious to fight these unauthorised price increases can follow up.
I hope that by this means we may see forged that kind of highly effective partnership between Press and Parliament that has helped to alleviate so many injustices; such as gave us the breakthrough, for instance, on the scandal of the thalidomide children. Give us this weapon to forge that partnership of Press and Parliament to fight the price exploiters and those who are evading the Government's policy.
Nothing could be simpler than the proposition contained in Amendment No. 56. It does no more than authorise the Price Commission to insist on the prominent display of a notice. Who could

possibly object to that except those who do not want an attack on the price scandals that we all know are taking place?
I believe the credibility and good intentions of the Government are at stake in their reaction to Amendment No. 56. If they turn it down or refuse to include a similar provision in a different clause in the Bill, perhaps in a different form, then we shall be sure of what some of us suspect; that they do not really care about arming the housewife against those who are exploiting the Government's policy.
I await the comments of the Front Bench with interest, and so do the housewives of Britain. If the amendment is not accepted they will know that the Government are not their champion.

Mr. Norman Atkinson: I support the amendment and all that my hon. Friends have said about it. This is an opportunity to put right one or two misconceptions of hon. Gentlemen on the Conservative benches about Labour Party policy. The Prime Minister seems to be suffering most from delusions about what we are saying. At Question time today he said that he thought that the Labour Party's policy on prices was not a viable alternative. He did not see how the Labour movement could advocate free wage bargaining within a system of regulated prices. He thought that was not a viable proposition. The Prime Minister and his hon. Friends never go on to tell us why a particular proposition is not viable.
In a debate of this kind we have to spell out the ideas that the Labour Party has been talking about for some time. I do not suggest that now is the moment to do that, but there are one or two aspects of the structure and method of price regulation that should be put right.
If we are serious in advocating that the whole nation should participate in an attempt to regulate prices, we must equip shoppers with the necessary means of participation. The public are not equipped effectively to pursue the policies projected by hon. Gentlemen on the Conservative benches. It is meaningless to talk about a shoppers' guide unless the price is exhibited on the product. I hope that those who advocate a shoppers' guide will advocate also the exhibition on all goods of the retail price of the product.
We have long advocated that people who have something to sell or who provide a service should display the price. With the present method of retailing, with all the supermarket techniques that are used, it is necessary for the price to be marked on the product not necessarily to equip the shopper with the information but to equip the staff who are selling the product with the information so that they can check out the purchasers quickly. The technique is now so sophisticated that retailers are dealing with an enormous throughput. When the price is stamped on all the articles the staff at the exits are quickly able to reckon up the total bill on a machine. Only in the smallest establishments is the price not stamped on each article.
We have not far to go. If the Minister decides that maximum prices must be exhibited on all products, we are already nearly there. It is necessary to link that with a shoppers' guide or the exhibition on the premises of a list giving differences in prices over the period of price regulation to ensure that shoppers participate and make the policy effective.
We advocate price regulation not only of essential foodstuffs but of a wide range of goods. Once a Labour Government is returned a method of price control will be introduced. I predict that we shall contest the next election on a policy of providing permanent, flexible price control not only of manufactured and primary foodstuffs but right across the board. Such a system will be devised in time for a future Labour Government. I regard this as essential if we are to pursue the policies that are already outlined for a future Labour Government.
We are moving into a managerial capitalism completely different from anything we have known in the past. We have got rid of all the traditional means of regulating the economy. Employment is no longer relevant as a means of regulation. Tax is no longer relevant to the business of managing the economy. The cost of money, the money flow, the control of monetary policy and most of the fiscal instruments available to Governments of the past are no longer relevant. Therefore, a new means has to be found of managing the economy. With those old regulators no longer there, the argument is between the control of wages on the one hand and the control of prices

on the other. It depends to which side of the House hon. Members belong whether they support capital or labour, and that is the argument which we are presenting, in the sense that I hope that all hon. Members on this side of the House, with the exception of hon. Members on that peculiar row—when they are there—

Mr. Carter: The post-capitalist party.

Mr. Pardoe: The hon. Member for Tottenham (Mr. Atkinson) is aware that not only members of the Liberal Party but also members of the two main parties are elsewhere today. There is no question of there being no party in this House that stands for both capital and labour. There is a party that stands for both. It is perfectly possible to believe in an equal partnership of capital and labour and not to take up a stance on one side or the other. The tragedy of these debates is that one party derives its income from one side and the other party derives its income from the other side.

Mr. Atkinson: I am grateful for that intervention because it leads me to my next analysis. In my view it is a question of which side of the argument one supports whether one argues for price regulation or regulation of wages. Therefore, from a Labour Party point of view it is absolutely logical to advocate free wage bargaining within a system of price regulation.
If we add that to this whole business of equipping housewives and shoppers generally with the necessary instruments to make this policy effective, then we have to argue closely the whole question of price regulation in relation to various authorities to whom a person should complain, and about permanent, flexible price regulation as a built-in feature of our policy.
7.30 p.m.
I can see an end completely to free competitive pricing and to the existing price mechanism. I do not think that that is very far away, anyway. I know many hon. Members opposite would agree that they, too, can see the end of the free price mechanism. But if we are talking about permanent price controls in this new form of capitalist society we would want, from the Labour Party point of view, either to


have negative VAT or negative purchase tax. In other words, as well as the ability to put a tax upon products for sale we would want perhaps to offer a subsidy, that is, to offer a purchase tax in reverse. Therefore, we would have negative purchase tax and negative VAT as part of the equipment.
Again one cannot present that argument in a sophisticated way in the absence of some understanding of how all this is conveyed to the participants, the housewives. We have to find the instruments and means whereby we can do this. In regard to flexible price regulation there are already, of necessity, a number of marketing boards which must be involved, and just as there are now marketing boards for certain basic food products, obviously a future Labour Government must increase the number of regulating authorities to whom people will no doubt wish to complain if there should be a variation from the guidelines set down by the central authority. Thus, even in engineering or manufacturing industry generally, there would be a need for participation, because the price regulating authority would be a different group. Therefore, there would be a need to exhibit some notice stating to whom any complaint should be addressed and who should be called on to investigate such infringement and whether retailer or manufacturer had strayed beyond the guideline.
All this is part of something which I envisage as a means of permanent price regulation in this country, for no other reason than that I do not believe that modern Western capitalism is any longer capable of self-regulation. Those days have gone. It cannot have a means of protecting itself from inflationary trends because the very nature of the system itself produces an inflationary situation. Therefore, if we are to overcome and to regulate that situation, new methods must be devised.
It is no accident that this trend is to be seen in capitalist society in Western Europe and in the Western world, in the United States and some of the South American societies, in Sweden and other Scandinavian countries. These are notable examples of this kind of trend which is developing at the moment throughout the EEC. All these countries have had

at some time to have some kind of price regulation. If that is so, I should think there is overwhelming evidence in the capitalist world that that kind of society, an ex-entrepreneurial society, is no longer capable of preventing the kind of inflationary drift that is now taking place.
Having once got rid of the traditional regulators and of all the controls of money supply, once having lost control of the price mechanism because of its monopolistic tendencies and so on—because all the kinds of change we can see taking place, incidentally, are contradictory to the traditional methods—we have to spell out very clearly what we mean when we talk about price regulation of this kind. But even more than that, even in this situation—which the Government believe to be a temporary situation, but obviously it is not—the Government themselves have to come forward with their own ideas of how they think such a system can be best policed and organised and how means of communication can be established between the point of sale and the authority laying down the guidelines, and what kinds of communications the Government require.
Therefore, in exactly the same way in which my right hon. Friend the Member for Blackburn (Mrs. Castle) set out the argument, I believe there are very good reasons for the Government telling us how they themselves see the situation and how they hope to get maximum use out of a shoppers' guide, or whether it is just another gimmick from hon. Members opposite.

7.36 p.m.

Mr. Stanley Orme: I want briefly to support my right hon. Friend's amendment to which I am a signatory. I do not want to take issue with my hon. Friend in a detailed analysis of the price mechanism and how it might effectively be controlled because as Members of the Standing Committee will know I have some criticism of how this can operate within the market forces now before us. But if the Government are serious they can at least adopt this very simple Amendment No. 56 because it says only that there should be displayed in any shop or establishment information on where a complaint can be made.
In the best-regulated circles in industry, as in a reputable hotel or public


house, prices are displayed and customers are told that if they are not charged the correct price they can raise objection. The best manufacturers have some form of real consultation with customers in the sense that they tell customers what the prices are and that complaint can be made. This amendment takes that a stage further by providing in retail establishments information on exactly where a complaint can be made. I do not believe that this is any form of "snooping". It is giving the shopper the right to ascertain how prices have moved.
Let us be under no illusion. When VAT comes in and taxes that now operate are ended, few will be able to understand how prices are to go up or down and whether they have been correctly charged. We know that the Government said in Standing Committee that they are to issue a shoppers' guide. The great difficulty here is that that is like telling women to shop around. Many of my constituents are working in a full-time job and have a family to look after and they cannot have the luxury of shopping around. They go into a shop and they may feel that something is not right when they find, as they probably do, that prices have increased over the previous week. If they knew immediately to whom they could complain, they could channel that complaint and something could be done about it.
I feel, as I felt in listening to the earlier debate this afternoon on the consultative document, that this is a complete load of nonsense. It will not operate. It is highly complicated. It has no legal status, even when it becomes the code itself. Only when the Government make an order will it be able to roll back, and we know from experience how difficult it is. Therefore, why not give the right to the housewife not to telephone the Ministry of Agriculture, Fisheries and Food but to lodge a complaint knowing that it will be followed up and that some action will be taken?
My right hon. Friend the Member for Bristol, South-East (Mr. Benn) described this as an extremely modest amendment. It does not try to close all the loopholes. However it states clearly to the dissatisfied shopper where a complaint can be made. It is as simple as that. We want to know from the Government why they will not accept it.

Mr. Carter: I support the remarks of the hon. Member for Birmingham, Hands-worth (Mr. Sydney Chapman). I agree with all that he said about the need to ensure that the prices of a whole range of consumer durables and of certain other items are made clear to the purchaser in the transitional period once VAT is introduced. The hon. Gentleman's arguments were put forward by me and by other hon. Members in Committee and examples were given of how already, long before VAT is upon us, various retailers, manufacturers and distributors are conducting a pre-VAT campaign which is doing nothing to enlighten the public but instead is creating ignorance, which is an appalling state of affairs when one considers that the introduction of VAT will be the biggest tax change that we have experienced for many years.
The Government listened to these arguments. They said that they were concerned and that they disapproved of this, that and the other. They said that they did not like what certain people were doing. At times they sounded quite annoyed. It was then that the Minister told us that the Government intended to issue instructions to industry, commerce and the retail trade, and finally we got a promise of a shoppers' guide.
The Government's counter-inflationary package has been criticised by a number of hon. Members who have said that they regard the various aspects of the policy as window dressing. I believe that the Government's attempts here are another example of their window dressing. If they had any intention of ensuring that a massixe tax change of the kind that we have not seen in living memory was brought about with justice for the consumer, they would have started an educational campaign many months ago to inform the housewife of the precise effect that the introduction of VAT will have not only on her cost of living, but on the individual items that she would be buying.
Apart from the examples given to the Minister in Committee, we see other illustrations on our television screens of the way that one group after another is "conning" the public already. My right hon. Friend the Member for Blackburn (Mrs. Castle) told the House how in Lincoln she heard of the efforts of Mothercare to ensure that when VAT


is introduced it will make exorbitant profits. A few evenings ago I was watching television. A complete programme was devoted to the way in which Mothercare, as VAT comes in and presumably for a year or so afterwards, will make exorbitant profits at the expense of those who probably most of all in our community, with the exception of old-age pensioners, are least able to bear its exorbitant prices. I refer, of course, to those with young families. Viewers saw label after label ripped off packages exposing old prices which bore no relation to the supposed 10 per cent. rate, which may be 7½ per cent. and may even be 5 per cent. If it proves to be 5 per cent. I doubt very much whether Mother-care will ask its retailers to reduce their prices. It seems to me that the company has made up its mind to charge a certain price after the introduction of VAT whether the final rate is 10 per cent., 7½ per cent. or 5 per cent.
I put one other point to the Minister on this subject of labelling. It concerns the free offer and the twopence and three-pence off offer. Supermarkets contain a range of items from television sets and electric cookers right through to a tube of toothpaste where customers are told that there is £10 or £5 off in the case of an electric cooker or twopence or threepence off in the case of a tube of toothpaste. If the Minister responds favourably and says that he will advise retailers to label their goods correctly with the pre- and post-VAT prices, I hope that he will also ask retailers to suspend all free and introductory offers for a period while VAT is being introduced, because I think that it will be impossible for a housewife looking at a label bearing the pre- and post-VAT prices and a twopence or threepence off offer to decide precisely what is the accurate price. The free and introductory offer is a major part of commercial practice and I should have thought from every point of view, especially that of the housewife, that for a period after the introduction of VAT the practice ought to be suspended. I hope on that score that we shall obtain a favourable response from the Minister.

7.45 p.m.

Mr. Patrick Jenkin: I assure the right hon. Member for Bristol, South-East (Mr.

Benn) that I regard these as important amendments. In my remarks I shall treat them with the importance that they deserve.
I agree very much with the right hon. Member for Blackburn (Mrs. Castle), who said that there was no simple price formula. We have had a variety of recipes offered us during the debate. The hon. Member for Cornwall, North (Mr. Pardoe) urged that we should have compulsory price posting, by which I understood him to mean lists of goods displayed in shops indicating their prices at the beginning of stage 2. My hon. Friend the Member for Birmingham, Handsworth (Mr. Sydney Chapman), echoed by the right hon. Member for Bristol, South-East, urged that in some way there should be "before" and "after" prices on labels. Here I think that my hon. Friend was referring more to the VAT changeover than to the continuing stage 2. The right hon. Member for Blackburn and the hon. Member for Salford, West (Mr. Orme) laid emphasis on providing shoppers with information telling them where to address their complaints. I shall come back to that in a moment. The hon. Member for Tottenham (Mr. Atkinson) treated us to a dissertation on the economic structure that he hoped to see under some future Government. I mean no disrespect when I say that I hope that he will forgive me if I do not pursue that too far. However I take note of what he said in supporting the right hon. Member for Blackburn.
I deal first with the main point made by the hon. Member for Cornwall, North in arguing for price posting. This is an amendment which has certain attractions. But I believe that they are superficial and do not survive a fairly close examination of what the implications would be.
Since we introduced the standstill last November several suggestions have been made that price posting should be mandatory. The Government have given careful thought to this idea. We have particularly looked at experience in America, to which I shall come later. We have come to the conclusion that mandatory price posting would not serve the purpose as usefully as some hon. Members have supposed. We do not have any law requiring prices to be posted.


Despite that, I think that the majority of shops now display prices. Where this is not done, it may be because it is not always practicable to do so. For example, displaying a list of current and base date prices would hardly be practicable for food retailers where the number of items is so large and where special offers are customary. I question whether it would be meaningful in such cases.

Mr. Arthur Lewis: Food retailers already display prices.

Mr. Jenkin: They display prices, but not the base date prices. The argument of the hon. Member for Cornwall, North was that there should be a starting point and that all the prices in force at that time should be permanently displayed so that shoppers may compare current prices, perhaps two, three or even six months ahead, with the price at the starting date.
In the United States, where there were mandatory requirements for the price posting of significant items and for the keeping of records of base date prices, it was found that the benefits to the consumer were not so marked as the burdens that it imposed on the shops. Price posting was not successful in America—this is the opinion of a number of observers there—because it did not fit in with the control based on gross percentage margins which was the same there as we are proposing for the distribution trade here. It confused and tended to irritate consumers because it appeared to provide a means whereby the housewife could compare current prices with those at an earlier stage while not providing real information to enable her to check whether the increases shown—increasingly as we move away from the base date there are bound to be increases as allowable costs are passed through—were justified.
Price posting might have some purpose and might be useful if we had a system of price control based on increases within a norm, but we have rejected such a system because, as I think the right hon. Member for Bristol, South-East might agree, a norm tends to become a minimum. Therefore, it is not as effective a system of price control as that which we are seeking to introduce—and have outlined in the Green Paper—for the distribution trade based on gross percentage margins.

Mr. Benn: The purpose of posting base and current prices is not to permit the shopper to reproduce in her own mind the Government's control of profit margins; it is to allow her to exercise her judgment in determining whether to buy a product that has increased in price, to go to another shop and bring some competition to bear, or to complain. The Chief Secretary should not confuse the arguments that have been put forward. We are not saying that the housewife could monitor whether the increase was legitimate, but that she would know what was going on. If the shopper does not know what is going on, the Government are denying themselves a powerful monitoring operation in support of their policy.

Mr. Jenkin: I take the right hon. Gentleman's point. But that was not how the argument was put by the hon. Member for Cornwall, North. It does not answer the point that I made that the American experience showed that this system tended to confuse and irritate the shopper. Whatever the right hon. Gentleman may say about the purpose of the exercise being to provide her with information, in fact it tended to suggest that this was somehow a legitimation of the price increases which were taking place. Her complaint was that she did not know whether the increases shown by the difference between the base and the current price were legitimate.
One report which I have seen states,
The Price Commission took considerable pains to try to devise a visibly effective method of control of retail prices and to enlist the consumer as a 'watchdog'. The results, however, cannot be said to have been convincing to the average shopper, although the controls may none the less have had the effect on prices for which they were designed.
That is the overall control.
Retailers are supposed to sell at the 'base' prices (usually the ceiling price allowed for a given item during the freeze) except that (a) if the price paid by the retailer has risen in accordance with Price Commission rules, the retailer may pass through the increase to the consumer, provided that (b) the overall margin of pre-income tax profits as a percentage of sales in the store, or chain of stores, does not exceed the base period margin.
The fact that allowable costs can be passed through makes the list of 'base' prices obligatorily posted in the store virtually useless to all but the most analytical customer"—
I think that this is the answer to the right hon. Gentleman's point—
and the programme is controlled only by the retailer's honesty and the watchdog


operations of the AFLO-CIO and the Internal Revenue Service.
In this country that function will be performed by officers of the Price Commission and, during the VAT changeover period, by the weights and measures inspectors.
Therefore, American experience is not encouraging. It appeared to them, as it appeared to many here, to be a good idea when started, but experience from a number of reports that we have seen and from some of the Press comment has shown that this system does not have the advantages that were claimed for it. Therefore, I could not advise the House to accept the new clause.

Mr. Atkinson: May I take the hon. Gentleman back to the beginning of that argument? He said that the Government had rejected the idea of using norms because they tended to become minima. Why is it that the Green Paper spells out a 50 per cent. norm for retailers passing on the cost of wage increases? The technique of using the norm is set out there in some detail. Why the two?

Mr. Jenkin: I do not wish to be led too far away. The hon. Gentleman is referring to what has become known as the productivity offset. This is a restriction of the right of the retailer to pass on what would otherwise be allowable costs and assumes that part of that will be absorbed by an increase in productivity. It is aimed at industry and commerce generally, not merely at the distribution trades.

Mr. Atkinson: Mr. Atkinson rose—

Mr. Jenkin: I must get on. This is not within the terms of the new clause or the amendment that we are discussing.

Mr. Atkinson: I am sure that the hon. Gentleman—

Mr. Deputy Speaker (Sir Robert Grant-Ferris): Order. We cannot have two hon. Members on their feet at the same time.

Mr. Jenkin: I do not wish—

Mr. Atkinson: On a point of order, Mr. Deputy Speaker. If there are not two hon. Members on their feet at the same time, how does one indicate to the other that he wants to make an intervention in the debate?

Mr. Deputy Speaker: That is a good point, but the hon. Gentleman knows what I mean. We cannot have two hon. Members persistently on their feet at the same time.

Mr. Jenkin: I have no desire, as it were, to choke the hon. Gentleman off, but he is moving wider than the new clause and the amendment and is getting involved in the 50 per cent. productivity offset. We are primarily concerned with the provision of information to the shopper, and she will not be concerned with that.

Mr. Atkinson: This is an important point. If the Minister is talking about norms becoming minima, I accept that and will refer to it when we get on to the wages question later. But his comment about the 50 per cent. is that it is likely to become the minimum.

8.0 p.m.

Mr. Jenkin: With respect, I think that the hon. Gentleman has misunderstood the 50 per cent. It is a productivity offset. It is the limitation of a firm's right to pass on a cost increase the existence of which cannot be denied.
My hon. Friend the Member for Birmingham, Handsworth suggested the use of double pricing on labels during the changeover from purchase tax and SET to VAT. He will perhaps have read the report of our Committee proceedings, when I explained that it would be open to customers who thought that a trader had not repriced his goods properly to take the matter up with the local weights and measures inspector. It will then be for the inspector to carry out the necessary investigation. Provision has therefore been made in the Bill for this critical and important changeover which the hon. Member for Birmingham, Northfield said is perhaps the biggest tax change for many decades in this country, to enable consumer complaints arising from the changeover to be handled and investigated thoroughly.
My hon. Friend may then ask how the customer is to have any idea whether the changeover has been fairly done. Here, I must return to the major campaign of information which it is the Government's intention to launch as soon as the details are settled—Press and television advertisements, and the shoppers'


booklet which will be available to guide the shopper on a wide range of consumer products and to give her some idea of what she may expect.
On the basis of the example of the slippers which the right hon. Lady literally produced in the House last Thursday, it would be difficult for a shopper who became aware of those facts not to become suspicious and to have enough information to take the matter up with the weights and measures inspector. I did not see the programme that the hon. Member for Birmingham, Northfield described, but if it were anything like his description it cannot have done the firm concerned much good.
In the Government's information campaign, we shall be providing shoppers with the material on which they can judge whether the change is being operated fairly. The weights and measures inspectors will be carrying out their own policing. We have made certain that the price standstill will go on until 28th April, so that, during that period, the only price changes which should take place are those attributable to the change in tax. So far as possible, it is the intention of the DTI and the Ministry of Agriculture to keep other price changes to an absolute minimum.
The right hon. Member for Bristol, South-East also pursued the idea of two prices on the label, but he pursued it through into the whole of phase 2. That is impracticable. It would be a much more cumbersome method even than compulsory price posting, which would impose a massive burden on retailers and which, as I have indicated, judging from the American experience, would bring little real help to the consumer. So that is not the most helpful way in which to deal with what is undoubtedly a difficult problem.
One can adopt a much more sympathetic approach towards Amendment No. 56. While agreeing with the objectives, however, one does not necessarily agree that this provision is needed in the Bill. After the VAT changeover period, during which the weights and measures inspectors will be active and their existence known, we shall be entering the second stage of the operations on the prices front, the beginning of stage 2 for prices. Administration of the controls during this

period will be the responsibility of the Price Commission, which will then be in operation. It will have a staff of local officers, based on the centres in which the DTI already has regional offices. It is to these centres and these local officers that customers will be invited to direct their complaints.
The important thing is that they should know about this. The Government envisage that the Price Commission would make, as a major part of its publicity activities, use of a wide variety of media to make shoppers aware of the existence and the location of these regional price officers.
The right hon. Lady the Member for Blackburn asked us to go one stage further and give the power to the Price Commission to order shops to display this information. This would mean taking a sldegehammer to crack a nut. It would be a very swingeing power indeed to impose this duty on presumably all retailers, or all those above a certain size, in an area, to achieve the same objective which can be achieved through the media—the local Press, posters and so on—

Mrs. Castle: Mrs. Castle indicated dissent.

Mr. Jenkin: The right hon. Lady disagrees with me. I am trying to express sympathy with her objectives, while casting some doubt on the means she suggests.

Mrs. Castle: My objective is very simple. It is to specify that there shall be a notice in the retail establishment. Has the Chief Secretary sympathy with that objective or not? If he has, it is no answer to say that the Price Commission, through its local offices, can stick posters somewhere else. He must take it from me that it is at this point that the reaction comes for a woman shopper. It is in the retail establishment, at the point at which she makes her purchase, that she becomes indignant and wants to see the address to which she can express her indignation. This should happen in the retail establishment. It is no good having sympathy and then saying that one can do nothing about it.

Mr. Jenkin: We must agree to differ on this. I can see the force of what the right hon. Lady says and the attractions for the case that she is making of


imagining that, in every shop, a notice giving this address should appear behind the counter. But this is taking a substantial power to bring to the attention of shoppers that which will be brought to their attention by other means—

Mrs. Castle: It would only be a power.

Mr. Jenkin: It would be a power to insist on the display in every shop—not just licensed premises, which already have to display certain notices—the name and address to which complaints can be sent.

Mrs. Castle: The hon. Gentleman is implying that it would be a substantial new power to say that, for Government purposes, notices must be displayed in every shop. Does he not know that, under the Shops Acts, notices are displayed giving the entitlement of employees to certain time off? What is so different about having a notice to give the rights of the customers?

Mr. Jenkin: I cannot take this any further. I appreciate that the right hon. Lady feels strongly, but I believe that this would be an excessive power, given the publicity campaign which will be deployed to make these things known. These arrangements should prove adequate for stage 2. Should there be any need to modify them in the light of

experience, the Government will do so, and Schedule 4 provides sufficient flexibility in this respect. In the light of what I have said, I hope that the right hon. Lady will not seek a Division on her amendment.

The hon. Member for Birmingham, Northfield described the price control powers as sheer window dressing. I do not believe that he is reflecting the view throughout the national Press this morning when they were confronted with the powers which we propose to write into the code and which have been disclosed in the consultative document.

The general weight of opinion on the matter has seemed to express surprise that the powers are as severe as they are and there has been some recognition that what the Government propose goes a long way to meeting the objections of trade unions and others who have been complaining that the prices side of the policy would lack teeth. The prices side will be every bit as effective as any of the rest of the policy and the powers that the Bill confers upon the agencies will see that this is so.

Question put, That the clause be read. a Second time:—

The House divided: Ayes 221, Noes 283.

Division No. 69.]
AYES
[8.11 p.m.


Abse, Leo
Concannon, J. D.
Fisher, Mrs. Doris(B'ham, Ladywood)


Allaun, Frank (Salford, E.)
Corbet, Mrs. Freda
Fitch, Alan (Wigan)


Archer, Peter (Rowley Regis)
Cox, Thomas (Wandsworth, C.)
Fletcher, Raymond (Ilkeston)


Ashley, Jack
Crawshaw, Richard
Fletcher, Ted (Darlington)


Atkinson, Norman
Cronin, John
Ford, Ben


Barnes, Michael
Crosland, Rt. Hn. Anthony
Forrester, John


Barnett, Guy (Greenwich)
Crossman, Rt. Hn. Richard
Fraser, John (Norwood)


Barnett, Joel (Heywood and Royton)
Cunningham, G. (Islington, S.W.)
Freeson, Reginald


Baxter, William
Darling, Rt. Hn. George
Galpern, Sir Myer


Beaney, Alan
Davidson, Arthur
Gilbert, Dr. John


Benn, Rt. Hn. Anthony Wedgwood
Davies, Denzil (Llanelly)
Ginsburg, David (Dewsbury)


Bidwell, Sydney
Davies, Ifor (Gower)
Golding, John


Blenkinsop, Arthur
Davis, Clinton (Hackney, C.)
Grant, John D. (Islington, E.)


Boardman, H. (Leigh)
Davis, Terry (Bromsgrove)
Griffiths, Eddie (Brightside)


Booth, Albert
Deakins, Eric
Griffiths, Will (Exchange)


Bottomley, Rt. Hn. Arthur
de Freilas, Rt. Hn. Sir Geoffrey
Hamilton, James (Bothwell)


Boyden, James (Bishop Auckland)
Delargy, Hugh
Hamilton, William (File, W.)


Bradley, Tom
Dell, Rt. Hn. Edmund
Hannan, William (G'gow, Maryhill)


Broughton, Sir Alfred
Dempsey, James
Hardy, Peter


Brown, Hugh D. (G'gow, Provan)
Douglas, Dick (Stirlingshire, E.)
Harrison, Walter (Wakefield)


Buchan, Norman
Douglas-Mann, Bruce
Hart, Rt. Hn. Judith


Butler, Mrs. Joyce (Wood Green)
Driberg, Tom
Hattersley, Roy


Callaghan, Rt. Hn. James
Duffy, A. E. P.
Heffer, Eric S.


Cant, R. B.
Dunn, James A.
Houghton, Rt. Hn. Douglas


Carmichael, Neil
Eadie, Alex
Howell, Denis (Small Heath)


Carter, Ray (Birmingh'm, Northfield)
Edelman, Maurice
Huckfield, Leslie


Carter-Jones, Lewis (Eccles)
Edwards, Robert (Bilston)
Hughes, Rt. Hn. Cledwyn (Anglesey)


Castle, Rt. Hn. Barbara
Edwards, William (Merioneth)
Hughes, Robert (Aberdeen, N.)


Clark, David (Colne Valley)
Ellis, Tom
Hughes, Roy (Newport)


Cocks, Michael (Bristol, S.)
English, Michael
Hunter, Adam


Cohen, Stanley
Evans, Fred
Irvine, Rt. Hn. Sir Arthur (Edge Hill)


Coleman, Donald
Faulds, Andrew
Janner, Greville




Jay, Rt. Hn. Douglas
Mikardo, Ian
Short, Mrs. Renée (W'hampton, N.E.)


Jeger, Mrs. Lena
Millan, Bruce
Silkin, Rt. Hn. John (Deptford)


Jenkins, Hugh (Putney)
Miller, Dr. M. S.
Silkin, Hn. S. C. (Dulwich)


Jenkins, Rt. Hn. Roy (Stechford)
Milne, Edward
Sillars, James


John, Brynmor
Mitchell, R. C. (S'hampton, Itchen)
Skinner, Dennis


Johnson, James (K'ston-on-Hull, W.)
Molloy, William
Small, William


Johnson, Walter (Derby, S.)
Morris, Charles R. (Openshaw)
Smith, John (Lanarkshire, N.)


Jones, Barry (Flint, E.)
Morris, Rt. Hn. John (Aberavon)
Spearing, Nigel


Jones, Dan (Burnley)
Mulley, Rt. Hn. Frederick
Spriggs, Leslie


Jones, Rt. Hn. Sir Elwyn (W.Ham, S.)
Murray, Ronald King
Stallard, A. W.


Jones, Gwynoro (Carmarthen)
Oakes, Gordon
Stewart, Rt. Hn. Michael (Fulham)


Jones, T. Alec (Rhondda, w.)
O'Halloran, Michael
Stoddart, David (Swindon)


Judd, Frank
O'Malley, Brian
Strang, Gavin


Kaufman, Gerald
Oram, Bert
Strauss, Rt. Hn. G. R.


Kelley, Richard
Orbach, Maurice
Summerskill, Hn. Dr. Shirley


Kinnock, Neil
Orme, Stanley
Swain, Thomas


Lambie, David
Owen, Dr. David (Plymouth, Sutton)
Thomas, Rt. Hn. George (Cardiff, W.)


Lamborn, Harry
Padley, Walter
Thomas, Jeffrey (Abertillery)


Lawson, George
Palmer, Arthur
Thorpe, Rt. Hn. Jeremy


Lee, Rt. Hn. Frederick
Parker, John (Dagenham)
Tomney, Frank


Lestor, Miss Joan
Parry, Robert (Liverpool, Exchange)
Torney, Tom


Lewis, Arthur (W. Ham, N.)
Pavitt, Laurie
Tuck, Raphael


Lewis, Ron (Carlisle)
Peart, Rt. Hn. Fred
Varley, Eric G.


Lipton, Marcus
Pendry, Tom
Wainwright, Edwin


Lomas, Kenneth
Perry, Ernest G.
Walden, Brian (B'm'ham, All Saints)


Lyon, Alexander W. (York)
Prentice, Rt. Hn. Reg.
Walker, Harold (Doncaster)


Lyons, Edward (Bradford, E.)
Prescott, John
Wallace, George


Mabon, Dr. J. Dickson
Probert, Arthur
Weitzman, David


McBride, Neil
Rees, Merlyn (Leeds, S.)
Wellbeloved, James


McCartney, Hugh
Rhodes, Geoffrey
Wells, William (Walsall, N.)


McGuire, Michael
Richard, Ivor
Whitehead, Phillip


Mackenzie, Gregor
Roberts, Albert (Normanton)
Whitlock, William


Mackie, John
Roberts, Rt. Hn. Goronwy (Caernarvon)
Willey, Rt. Hn. Frederick


McNamara, J. Kevin
Robertson, John (Paisley)
Williams, Alan (Swansea, W.)


Mahon, Simon (Bootle)
Roderick, Caerwyn E.(Brc'n&amp;R'dnor)
Williams, Mrs. Shirley (Hitchin)


Mallalieu, J. P. W. (Huddersfield, E.)
Rodgers, William (Stockton-on-Tees)
Williams, W. T. (Warrington)


Marks, Kenneth
Roper, John
Wilson, Alexander (Hamilton)


Marquand, David
Rose, Paul B.
Wilson, William (Coventry, S.)


Marshall, Dr. Edmund
Ross, Rt. Hn. William (Kilmarnock)



Mason, Rt. Hn. Roy
Rowlands, Ted
TELLERS FOR THE AYES:


Mayhew, Christopher
Sandelson, Neville



Meacher, Michael
Sheldon, Robert (Ashton-under-Lyne)
Mr. John Pardoe and


Mendelson, John
Shore, Rt. Hn. Peter (Stepney)
Mr. David Steel.




NOES


Adley, Robert
Campbell, Rt. Hn. G. (Moray &amp; Nairn)
Fidler, Michael


Alison, Michael (Barkston Ash)
Carlisle, Mark
Finsberg, Geoffrey (Hampstead)


Allason, James (Hemel Hempstead)
Carr, Rt. Hn. Robert
Fisher, Nigel (Surbiton)


Amery, Rt. Hn. Julian
Chapman, Sydney
Fletcher-Cooke, Charles


Archer, Jeffrey (Louth)
Chichester-Clark, R.
Fookes, Miss Janet


Astor, John
Churchill, W. S.
Fortescue, Tim


Atkins, Humphrey
Clark, William (Surrey, E.)
Foster, Sir John


Awdry, Daniel
Clarke, Kenneth (Rushcliffe)
Fowler, Norman


Baker, Kenneth (St. Marylebone)
Clegg, Walter
Fox, Marcus


Baker, W. H. K. (Banff)
Cockeram, Eric
Fraser, Rt. Hn. Hugh (St'fford &amp; Stone)


Balniel, Rt. Hn. Lord
Cooke, Robert
Fry, Peter


Batsford, Brian
Coombs, Derek
Galbraith, Hn. T. G. D.


Beamish, Col. Sir Tufton
Cooper, A. E.
Gardner, Edward


Bell, Ronald
Corfield, Rt. Hn. Sir Frederick
Gibson-Watt, David


Bennett, Sir Frederic (Torquay)
Cormack, Patrick
Gilmour, Ian (Norfolk, C.)


Bennett, Dr. Reginald (Gosport)
Costain, A. P.
Gilmour, Sir John (Fife, E.)


Benyon, W.
Critchley, Julian
Glyn, Dr. Alan


Berry, Hn. Anthony
Crouch, David
Godber, Rt. Hn. J. B.


Biffen, John
Crowder, F. P.
Goodhart, Philip


Biggs-Davison, John
Davies, Rt. Hn. John (Knutsford)
Goodhew, Victor


Blaker, Peter
d'Avigdor-Goldsmid, Sir Henry
Gorst, John


Boardman, Tom (Leicester, S.W.)
d'Avigdor-Goldsmid, Maj.-Gen.Jack
Gower, Raymond


Body, Richard
Dean, Paul
Gray, Hamish


Boscawen, Hn. Robert
Deedes, Rt. Hn. W. F.
Green, Alan


Bossom, Sir Clive
Digby, Simon Wingfield
Grieve, Percy


Bowden, Andrew
Dixon, Piers
Griffiths, Eldon (Bury St. Edmunds)


Braine, Sir Bernard
Dodds-Parker, Sir Douglas
Grylls, Michael


Bray, Ronald
Drayson, G. B.
Gummer, J. Selwyn


Brewis, John
du Cann, Rt. Hn. Edward
Gurden, Harold


Brinton, Sir Tatton
Dykes, Hugh
Hall, Miss Joan (Keighley)


Brockiebank-Fowler, Christopher
Eden, Rt. Hn. Sir John
Hall, John (Wycombe)


Brown, Sir Edward (Bath)
Edwards, Robert (Bilston)
Hall-Davis, A. G. F.


Bruce-Gardyne, J.
Elliot, Capt. Walter (Carshalton)
Hamilton, Michael (Salisbury)


Bryan, Sir Paul
Elliott, R. W. (N'c'tle-upon-Tyne, N.)
Hannam, John (Exeter)


Buchanan-Smith, Alick (Angus, N&amp;M)
Emery, Peter
Harrison, Brian (Maldon)


Buck, Antony
Eyre, Reginald
Harrison, Col. Sir Harwood (Eye)


Bullus, Sir Eric
Farr, John
Haselhurst, Alan


Burden, F. A.
Fenner, Mrs. Peggy
Hastings, Stephen







Havers, Sir Michael
Mawby, Ray
Shaw, Michael (Sc'b'gh &amp; Whitby)


Hayhoe, Barney
Maxwell-Hyslop, R. J.
Shelton, William (Clapham)


Heseltine, Michael
Miscampbell, Norman
Simeons, Charles


Hicks, Robert
Mitchell, Lt.-Col.C. (Aberdeenshire, W)
Sinclair, Sir George


Hiley, Joseph
Mitchell, David (Basingstoke)
Skeet, T. H. H.


Hill, John E. B. (Norfolk, S.)
Moate, Roger
Soref, Harold


Hill, S. James A.(Southampton, Test)
Molyneaux, James
Speed, Keith


Holland, Philip
Money, Ernie
Spence, John


Holt, Miss Mary
Monks, Mrs. Connie
Sproat, Iain


Hordern, Peter
Montgomery, Fergus
Stainton, Keith


Hornby, Richard
More, Jasper
Stanbrook, Ivor


Hornsby-Smith, Rt. Hn. Dame Patricia
Morgan-Giles, Rear-Adm.
Stewart-Smith, Geoffrey (Belper)


Hunt, John
Morrison, Charles
Stodart, Anthony (Edinburgh, W.)


Hutchison, Michael Clark
Mudd, David
Stoddart-Scott, Col. Sir M


Iremonger, T. L.
Nabarro, Sir Gerald
Stokes, John


Irvine, Bryant Godman (Rye)
Neave, Airey
Stuttaford, Dr. Tom


James, David
Nicholls, Sir Harmar
Sutcliffe, John


Jenkin, Patrick (Woodford)
Noble, Rt. Hn. Michael
Tapsell, Peter


Jessel, Toby
Normanton, Tom
Taylor, Sir Charles (Eastbourne)


Johnson Smith, G. (E. Grinstead)
Nott, John
Taylor, Frank (Moss Side)


Jones, Arthur (Northants, S.)
Onslow, Cranley
Taylor, Robert (Croydon, N.W.)


Jopling, Michael
Oppenheim, Mrs. Sally
Tebbit, Norman


Joseph, Rt. Hn. Sir Keith
Orr, Capt. L. P. S.
Temple, John M.


Kaberry, Sir Donald
Osborn, John
Thatcher, Rt. Hn. Mrs. Margaret


Kellett-Bowman, Mrs. Elaine
Owen, Idris (Stockport, N.)
Thomas, Rt. Hn. Peter (Hendon, S.)


Kilfedder, James
Page, Rt. Hn. Graham (Crosby)
Thompson, Sir Richard (Croydon, S.)


Kimball, Marcus
Parkinson, Cecil
Tilney, John


King, Tom (Bridgwater)
Peel, Sir John
Trafford, Dr. Anthony


Kinsey, J. R.
Percival, Ian
Trew, Peter


Kirk, Peter
Peyton, Rt. Hn. John
Tugendhat, Christopher


Kitson, Timothy
Pink, R. Bonner
Turton, Rt. Hn. Sir Robin


Knight, Mrs. Jill
Pounder, Rafton
van Straubenzee, W. R.


Knox, David
Powell, Rt. Hn. J. Enoch
Vaughan, Dr. Gerard


Lambton, Lord
Price, David (Eastleigh)
Vickers, Dame Joan


Lamont, Norman
Prior, Rt. Hn. J. M. L.
Waddington, David


Lane, David
Proudfoot, Wilfred
Walder, David (Clitheroe)


Langford-Holt, Sir John
Pym, Rt. Hn. Francis
Walker, Rt. Hn. Peter (Worcester)


Le Marchant, Spencer
Raison, Timothy
Walker-Smith, Rt. Hn. Sir Derek


Lewis, Kenneth (Rutland)
Ramsden, Rt. Hn. James
Wall, Patrick


Lloyd, Ian (P'tsm'th, Langstone)
Rawlinson, Rt. Hn. Sir Peter
Walters, Dennis


Longden, Sir Gilbert
Redmond, Robert
Ward, Dame Irene


Loveridge, John
Reed, Laurance (Bolton, E.)
Warren, Kenneth


Luce, R. N.
Rees, Peter (Dover)
Weatherill, Bernard


McAdden, Sir Stephen
Rees-Davies, W. R.
White, Roger (Gravesend)


MacArthur, Ian
Renton, Rt. Hn. Sir David
Wiggin, Jerry


McCrindle, R. A.
Rhys Williams, Sir Brandon
Wilkinson, John


McLaren, Martin
Ridley, Hn. Nicholas
Winterton, Nicholas


Maclean, Sir Fitzroy
Ridsdale, Julian
Wolrige-Gordon, Patrick


McMaster, Stanley
Rippon, Rt. Hn. Geoffrey
Wood, Rt. Hn. Richard


Macmillan.Rt.Hn. Maurice (Farnham)
Roberts, Michael (Cardiff, N.)
Woodnutt, Mark


McNair-Wilson, Michael
Roberts, Wyn (Conway)
Worsley, Marcus


McNair-Wilson, Patrick (New Forest)
Rodgers, Sir John (Sevenoaks)
Wylie, Rt. Hn. N. R.


Maddan, Martin
Rossi, Hugh (Hornsey)
Younger, Hn. George


Madel, David
Rost, Peter



Maginnis, John E.
Russell, Sir Ronald



Marples, Rt. Hn. Ernest
St. John-Stevas, Norman
TELLERS FOR THE NOES:


Mather, Carol
Scott, Nicholas
Mr. Paul Hawkins and


Maude, Angus
Scott-Hopkins, James
Mr. Oscar Murton.

Question accordingly negatived.

Clause 1

ESTABLISHMENT OF TWO AGENCIES: THE PRICE COMMISSION AND THE PAY BOARD

Mr. Prentice: I beg to move Amendment No. 1, in page 1, line 8, after 'Pay' insert 'Advisory'.

Mr. Deputy Speaker (Sir Robert Grant-Ferris): With this Amendment it will be convenient to discuss the following Amendment No. 2, in Clause 2, page 2, line 29, leave out 'pay' and insert
'tendering advice on levels of all types of remuneration'.

Amendment No. 6, in page 5, line 26, leave out Clause 7.

Amendment No. 7, in Clause 7, page 5, line 32, at end insert
'unless the remuneration in question has been identified as a case for special treatment by an independent Court of Enquiry appointed by the Minister'.

Mr. Prentice: All the amendments in various ways seek to modify the Government's pay policy. By way of introduction I put it to the House that the Government's attitude on the new clauses proves once more how weak their attitude is towards the whole question of price control. Meanwhile, events outside


the House today have proved the widespread bitterness and discontent that exists in the country at the moment about the application of the Government's pay policy. The publication yesterday of the code confirms the basic criticism that has been made from the Opposition benches on so many occasions that we are dealing with a policy which is fundamentally unbalanced and unfair, which is seen to be unfair, and, therefore, which is unworkable in the long run or in the medium run.
In moving the amendment I do not seek to open up afresh a debate on the whole policy, but I think that the amendments give the House an opportunity to put to the Government the simple point that they must be more flexible. Even by their own criteria they need to be more flexible in the way that they operate their pay policy in the coming months. If we consider the matter from the point of view of a Government trying to do this exercise in a freeze period, it can be said to be necessary to be adamant and to make no exceptions. In a freeze period it may be necessary to say, "We cannot allow exceptions. We know that the policy is unfair, but it has to be unfair. It is only on a rigid basis that a freeze can be maintained." However, once the country moves beyond the end of a freeze period, I put it to the House—and I hope that I carry the whole House with me—that a new situation arises in which there has to be an element of discrimination and an element of choice between the merits of different claims.
There are problems which will not go away. They will not be solved by sending letters of admonishment in pay packets to civil servants, or by the Secretary of State for Northern Ireland making lurid speeches during the weekend, or whatever other secret weapons Ministers may have up their sleeves. Indeed, to a limited extent the Government have acknowledged in the code that there must be a greater degree of discrimination in phase 2 than in phase 1. Paragragh 122 of the code contains the statement, which I welcome, that on the due date, there will be full implementation of settlements reached before 6th November 1972.
That point was urged upon the Government by the Opposition in Committee. I am glad that the Government have

conceded the logic of what was said to them. But what does it mean? It means that where there was a written agreement—as, for example, in the building industry—for two stages of a pay settlement, the second stage can take effect.
Many other cases about which the country is arguing today are almost the same as that, in principle. For example, there is the argument about the London teachers' allowance. It concerns the payment of an allowance which was regarded in April 1972 as part of the teachers' award. Its implementation was postponed for a few months. It would have been agreed by November if Ministers had not deliberately held up negotiations about detail. The London teachers can say that in principle they are in the same position as those who are covered by paragraph 122.
The hospital workers' case cannot be formalised in quite the same way, but it is similar in principle. Hospital workers have traditionally been linked with local government workers. Both are low-paid workers, and they are linked to each other. Both perform essential community services which in the past we have never rewarded properly. Hospital workers have been forced to accept this situation, together with local government workers. They have a grievance which goes very deep. That fact should be recognised by hon. Members on both sides of the House.
The civil servants have a similar case, the principle of which is set out in the Priestley Report. It has been accepted by successive Governments that Civil Service pay should be decided on the principle of comparability with people doing similar work outside. Because of the way in which that formula has worked, civil servants can never be the pace-makers, in terms of inflation. If this Government, or any Government, succeed in slowing down the rate at which people's incomes are growing, there will be a consequent slowing down within the Civil Service. It is very unfair to interpose the policy at the point when the Civil Service is due to catch up with rises that other people have already had.
I underline the point that has been made in previous debates, that if the Government persist in their attitude they


are in danger of doing permanent damage to the system of mutual trust, co-operation and joint consultation within the Civil Service which has existed under the Whitley system for 50 years. Over the years many people of good will on both the official and the staff side have contributed to that system. It is an area in which greater flexibility is needed from the Government.
I now refer to another set of cases in which there has been an exceptional improvement in productivity. I shall argue the point entirely in counter-inflationary terms. Surely the message that has been accepted by all of us over the years is that productivity agreements in a factory or a plant—sometimes in a formal sense and sometimes by the co-operation of both sides—provide the way by which people can achieve higher real earnings without passing them on in the form of higher prices.
Is not that a doctrine which we have alt accepted? Have not we all stood on productivity platforms, speaking of productivity weeks and productivity years, and so on, advocating the simple point that this is a way in which people can achieve higher real earnings without passive them on in the form of higher prices? Better still, there might be an increase in productivity, part of which could be nassed on in the form of lower prices. But part of such an agreement was always understood to he that the workers should agree to the extra productivity methods and, perhaps, to some upheaval in their working conditions—perhaps they had to agree to redundancies among their workmates—hut that they would share to some recognisable extent in the results of the productivity gains.
The effect of the freeze period plus the effect of the phase 2 period—there is a total period, perhaps, of a year in which there are to he no gains for productivity—may do permanent damage to productivity bargaining and to the willingness of people to accept a degree of inconvenience and sacrifice in order to achieve greater productivity.
8.30 p.m.
This makes it very difficult for the present Government or any other Government to fight inflation, because part of an intelligent counter-inflation

policy in an industrial society such as ours must be the encouragement of greater productivity by one means or another. Therefore, to stop productivity deals from having any effect, or to stop any gains flowing from new productivity arrangements, may just be acceptable in terms of a freeze situation, but it is not acceptable in terms of the period which follows a freeze.
This analysis applies to the current miners' claim, and I believe that it applies to the current claim of the Ford workers. Above all, it applies to the current dispute in the gas industry.
In passing, I make one further appeal to the Secretary of State for Employment to use his good offices in some way to try to bring to a close this unhappy dispute in the gas industry. What we have witnessed so far in the industry has been an amazing demonstration of moderation. People and newspapers have talked about a gas strike. In fact, there has not been a gas strike. There has been a strike by a minority of the workers in the industry and an overtime ban by the others, but gas supplies have been maintained to most consumers. But as one week succeeds another the action will be stepped up. I am not now pronouncing on whether or not it ought to be stepped up, I am simply saying that that is what is happening and what will happen.
What is so terrible in this situation is that in so far as the Secretary of State for Employment is allowed by his colleagues to exercise his rôle as Secretary of State, he is allowed to act too little and too late. Last Friday week the right hon. Gentleman said that it would be possible for the board, or for a nucleus of the board, to consider this case at an early date. If he had made that statement before the industrial action began we might not have had the industrial action. But he made it when it was already too late to be acceptable.
I urge the right hon. Gentleman once more to consider a court of inquiry along the lines suggested by Sir Henry Jones, a Royal Commission formula as suggested by my right hon. Friend the Leader of the Opposition or a similar formula which would enable the workers to recognise that they have a real chance to state their case before a tribunal which would consider its merits.
Finally, there has been much talk in recent weeks about the possibility of a major industrial confrontation arising from this policy. I have never believed that it would happen, and current evidence is that it will not. But I fear that from this policy will flow something more damaging to this country than a series of major strikes. I fear that we shall see the collapse of co-operative arrangements that have been arrived at patiently over the years and have been of great benefit to all members of the community. I fear that we shall see damage done to the Whitley system for civil servants, an unwillingness to enter into productivity agreements and greater sourness in industrial relations. This will be bad for industrial relations and, among other things, fatal to any policy for countering inflation.

Mr. Orme: As we proceed in these debates the daily events thrown up by various industrial actions become the meat and drink of work on this legislation. What is happening is that because of the nature of the Government's policy every industrial action becomes a political matter. This has come about because the Government have prevented the carrying out of free collective bargaining as it has come to be operated in our society.
It was said several times in Committee by Government spokesmen that the Government took pride in the fact that their present policy was based on President Nixon's United States policy. We were told on a number of occasions how successful the United States had been in this sphere, that they had moved from phase 1 to phase 2 and had now arrived at phase 3. We were told that this had been accepted by American workers and by the United States trade union movement. The American trade union movement is powerful in certain sectors of the American economy, but it is recognised that it has not the overall economic power of the British trade union movement.
But now, alas, we see that the American experience is running into heavy water. I quote from this week's Sunday Telegraph under the heading "Nixon's phase 3 in trouble". The following item was part of a report by Richard Walker in Washington:
Phase 3 of President Nixon's economic plan to prod America toward 'the most bountiful prosperity ever'"—

quoting the words of President Nixon—
is in direct danger of collapsing before it has begun.
The report goes on:
The aim is that the tight wage and price control of Phase Two should be eased back into a system of mainly voluntary restraint. This, it is hoped, will lead to full employment and eventually to the disappearance of budget deficits. Six weeks after Phase Three's unveiling all indications are that it is not working out that way.
Prices are rocketing in the United States, despite monitoring and all the rest.
I now wish to refer to a report in the United States United Electrical Union Journal of 8th January 1973, from Chicago, under the headline:
Predict New Big Rise in Basic Food Items.
The report quotes the Wall Street Journal and says:
United States consumers could be socked with spiraling prices of meats, milk and, later on, eggs.
The report goes on to state that increases could be in the region of as much as six cents a pound for chicken, and gives other examples of price increases in the United States.
Since the Secretary of State for Employment and his right hon. Friend the Prime Minister draw such succour from the American experience, should they not now tell the House what has gone wrong with President Nixon's policy and explain whether the Government are still intent on slavishly following that policy?
Let us consider the current industrial disputes. Today deputations from the Civil Service came to the House because they are aggrieved that the Priestley recommendations have not been carried out. It will be recalled that in 1966 when in Opposition the present Prime Minister stated that there should be no interference in agreements which had already been reached. The non-implementation of the Priestley recommendations will prevent civil servants getting what they consider to be a justifiable reassessment.
Many other workers are involved in the present situation. There are the gas workers, the Ford workers, and the many others who cannot be said to be just beginning wage negotiations but who are at the end of the process. We have seen for the first time in history major industrial action by civil servants in this


country. It is rather amusing to get letters such as all hon. Members are receiving from civil servants, who are highly articulate people. The post flows in, so you send a letter to the Secretary of State. A civil servant drafts the answer and sends it back to the hon. Member, who sends it on to the civil servant. It is a process of paper circulating around—a sort of end process.
But the serious aspect is that the civil servants are firmly agreed and have been forced to take industrial action. This is not industrial action dictated by some outside body, it is not industrial action called for by the General Council of the TUC, or anything like that. It is action which they feel it necessary to take themselves.
Tomorrow we are to have no trains. The railways will be still and there will be a major rail strike. Why is there a major rail strike tomorrow? Many hon. Members will have received particulars of the train drivers' case as issued by the Associated Society of Locomotive Engineers and Firemen—the statement of their General Secretary, Mr. Ray Buckton. What he is saying in this plaintive statement is that they were promised negotiation after last year's dispute, the terms of reference of which were:
To review the Wages Structure for Footplate Grades, including mileage and bonus payments, in relation to outstanding and foreseen Railway requirements, and to make recommendations to the Railway Staff National Council.
That policy includes negotiation on the 100-mile-an-hour-plus trains. It was accepted that these negotiations were to be separate from the general wage negotiations of the railways.
So they entered into these negotiations and, as we all know in industrial relations, there was for a considerable time to-ing and fro-ing, a certain amount of pressure, meetings, and so on. They finally got down to discussing it, and then the Railway Board said they would discuss it in accordance with the terms I have read out. But, the report goes on, the Railway Board said that
it would be necessary for any recommendations stemming from the proposals to be interfaced both with the Government's programme for controlling inflation and the general pay claim which had been presented by the National

Union of Railwaymen and the Transport Salaried Staffs' Association.
So they say to the railwaymen, who have a claim for skilled industrial workers, who have a special claim in regard to their ability and the work they will have to do, after 12 months of negotiation—and these terms were arrived at peacefully last June and we had that industrial dispute 12 months ago—that it must come within the terms of £1 and 4 per cent. That is what the railway strike tomorrow is about. It is not about the normal wage application. It is about the procrastination which has been brought about by the Government's policy.
8.45 p.m.
I say to the House that in my opinion these industrial disputes which we now face are of such a nature that they could have been completely avoided. I made the case in the Committee in some detail, and I do not want to repeat it here, because it is on record and has been reported elsewhere, concerning the Ford workers' claim, and I and my colleagues have made out the case very clearly and succinctly in favour of the gas workers at this time.
It is not the job of Members of Parliament to negotiate for trade unionists. That is what the trade union movement and free collective bargaining are about. It is for trade unionists to negotiate. Sometimes they are successful, and sometimes they are not. We live in an imperfect society, but with correct industrial relations, and workers who pay attention to increased productivity and production and so on, it is possible to reach amicable arrangements in more cases than it is not.
But now every wage claim becomes a matter for Members of Parliament. Trapped by the Bill, trade unions have nowhere to turn. Industrial action will be illegal, if the Government make an order about the claim in question. There is nothing to stop British Rail settling with the railway drivers now. There is nothing to stop the Ford Motor Company settling with its workers. That would not be illegal. If the hon. Member for Oswestry (Mr. Biffen) has done nothing else, he has exposed the fact that without an order against a specific claim or pay increase it is legal at present for trade unions to negotiate wage increases above the recommended norm or for price increases to be


imposed. There is no legal restriction under phase 2 other than an order in council made by the Secretary of State.

Mr. Atkinson: People are beginning to write to Members about the legal position. We want to make it absolutely clear that, while it is not illegal for, say, the Ford workers to conclude an agreement with their employers, with the increase to be paid during the present period, the Secretary of State would issue an order forthwith preventing the workers from receiving the money. We should make it absolutely clear, therefore, that there is no legal loophole through which any group of workers can force their way.

Mr. Orme: My hon. Friend has overlooked one point. The Government cannot make any orders under the Bill yet, because it is not an Act. They are asking people to enforce a measure which is not yet an Act. If the Government cannot act retrospectively, I do not think that even when the Bill has become an Act they will be able to overturn a settlement reached now. They can roll back a price increase or wage settlement once the Bill is on the statute book, but in my opinion they do not have the power legally to do so now, unless they take retrospective powers, which as far as I can see the Bill does not contain.
We are in the twilight period between the freeze and the coming into force of the Bill. The nonsense of the current situation has been exposed. We have made these points time and again in Committee.
The Government's policy is worsening industrial relations, increasing strikes and preventing free collective bargaining. It is the Secretary of State's duty to tell the Prime Minister to end the present policy and to return to a sane policy of free collective bargaining.

Mr. Cecil Parkinson: One of the first speeches I heard in this House when I was elected in a by-election in November 1970 was made by the hon. Member for Salford, West (Mr. Orme) on the Industrial Relations Bill. I have heard him make many sincere and strong speeches about a cause in which he obviously very passionately believes. But I thought that tonight he was straining the credulity of the House by suggesting that the railwaymen had chosen tomorrow

as the day to strike because this was the week of all weeks when their patience had finally run out. It seemed a very convenient week for their patience finally to run out, a week in which they could join with other members of the trade union movement in making a demonstration of strength against the Government. Many people who will be prevented from going to work tomorrow and many who will have their business life disrupted will regard it as a demonstration of strength and aggressiveness by the railway unions and not as a desperate gesture of a group of people whose patience has finally run out.

Mr. Orme: The hon. Member must recognise that the railway unions were negotiating during the weekend with the Railways Board and up to last night to reach a settlement. They did not want a strike but they and Mr. Buckton wanted a form of agreement to prevent the strike. Therefore it was not premeditated. Matters do not work out like that in this country. The negotiations broke down and so we are to have the strike tomorrow.

Mr. Parkinson: The hon. Member is entitled to his view, as I am entitled to mine, but, without being in any way presumptuous, I believe that the vast majority of the public will read the situation my way and not his.
I listened to the hon. Member again tonight saying, "Let us get back to free collective bargaining." I share his ambition that we should do so, but until we tackle what I consider one of our big national problems free collective bargaining will remain something of a joke, and a rather sad joke. We have in this country nationalised monopolies, nationalised in the public interest, manned almost inevitably by a trade union monopoly operating within those nationalised monopolies, which has decided over the course of the last few years to start using that monopoly power in an anti-social way which would not be allowed to any private cartel.
We would not even have allowed such private cartels to exist. We would have wheeled in the Monopolies Commission and the monopoly would have been investigated. But we have created these immensely powerful State monopolies which cannot go bankrupt, which are not


subject to normal commercial disciplines and within which the unions have started to abuse their powers. When I listened to gas workers boasting that the Gas Council has already lost the £15 million surplus it made last year, my reaction was to hope that the Gas Council in that situation will withdraw its offer and make an offer that it can afford because until we get to a stage where one may lose by going on strike as well as gain, the idea of free collective bargaining is not to be taken seriously.

Mr. Bruce-Gardyne: My hon. Friend has referred to the Gas Council making "an offer which it could afford". Will he elaborate what he means by "afford"?

Mr. Parkinson: My hon. Friend knows as well as I do that the Gas Council probably could not afford to make the offer it then made, but it can now afford it £15 million less by the reckoning of the trade union movement. Every time anyone tries to react and urges the Government to use the power of the law, we are told that it would be interfering with free collective bargaining. I do not know what is free in the bargaining between the National Coal Board and the National Union of Mineworkers.
Last year, the public were dragooned into believing that the miners were a group of very deserving men who had been left behind. The same group of men, who received very substantial increases as a result of last year's strike, are out to capture public attention again, and I intend to do all in my power, limited though it may be, to ensure that they do not succeed in gaining public sympathy this time for a case which was not a particularly good one last year and has little merit, if at all, this year.
The right hon. Member for East Ham, North (Mr. Prentice) said there were unfairnesses in the policy. I agree that there are bound to be anomalies if one calls a halt at any given moment, if one does not let the wheel turn full circle. But there is not a moment in the year when the wheel has turned full circle. There is always someone who was due to enter negotiations, or had been on the point of completing them. There is not a moment when one can say that everyone has had a chance and that this is where we must

stop. So I accept that there is unfairness, but I am sure that there would be greater unfairness if we did not tackle the problem.
The right hon. Gentleman dragged out the old hoary tale about productivity deals. How do we measure productivity deals? We are constantly told about output per man shift and the increase in output, but there is no mention of the huge investment in capital machinery that may have taken place. That is totally discounted. The right hon. Gentleman knows as well as I do that often productivity deals are an excuse for breaching an agreement, that the productivity rarely matches up to expectations. It is often just a convenient peg on which to hand a capitulation for which one had to have an excuse. If we can find a proper way of measuring productivity, I shall become more enthusiastic about productivity deals, but at the moment our methods of measuring them leave a lot to be desired. A genuine productivity gain is not an easy thing to measure.
The right hon. Gentleman talked of the degree of sacrifice involved in the Government's policy. We are constantly hearing about the degree of sacrifice in relation to the low-paid worker. The amount able to be paid under the Government's policy is an average of 8 per cent., but, in the event of agreement between the union and the employer, it is possible for an increase to represent 25 per cent. or even 33 per cent. We are constantly told about the £15-a-week man in this industry or the £20-a-week man in that industry. We on this side have the right to ask why, after six years of Labour Government, there were so many low-paid workers. Why, if wages have gone up so much in the last two years, did these workers start at so low a base when the economy had been in the hands of the Labour Government for six years, that they are still earning under £20 a week.
A policy which gives the opportunity for 25 or even 33 per cent. increases to the lower paid can hardly be described as an affront, and surely a national average of 8 per cent., while it may involve sacrifice in certain cases, should not be under-estimated. The policy offers, as the right hon. Gentleman, who is a fair-minded man, will admit, opportunities for the lower paid, provided the unions


and the managements agree, to be better off to the extent of 25 or 33 per cent.—the latter being the possible figure for the very low paid. These are very considerable figures.
This country is sick to death of the hypocrisy involved in the low-paid worker being used as a means of boosting the wages of the high-paid. The trade union movement, with its love of differentials, is further bringing the collective bargaining system into disrepute by using the low-paid as an excuse for getting a really good deal for the high-paid. It needs the low-paid person because most of its manoeuvreings are based on the fact that he exists. Without him most of its arguments would be a sham.
The views of hon. Members opposite are no doubt sincerely held but the country as a whole has had enough of this play on words, this talk of collective bargaining which is not free and which has been abused—this misuse of the plight of the low-paid. I do not believe that this Bill is any sort of threat and I do not believe that it is unjust to an extent which is not tolerable in the national interest.

9.0 p.m.

Mr. F. P. Crowder: I shall detain the House for only a few moments but I believe that everyone would agree—

Mr. Arthur Lewis: On a point of order, Mr. Deputy Speaker. I have been in this House long enough to know that one never criticises the Chair and I do not do so now. I raise this as a matter of general principle. It is, I believe, the usual custom and practice for the Chair as far as possible to proceed alternately in its selection of speakers and I am wondering whether your last selection was intentional or an accident on your part.

Mr. Deputy Speaker (Sir Robert Grant-Ferris): I quite understand the hon. Gentleman's point. I realise that he knows what the rules are. I had thought that this might happen. I am glad to be able to explain to the House that, inadvertently, when the right hon. Member for East Ham, North (Mr. Prentice) sat down, I called the hon. Member for Salford, West (Mr. Orme) without seeing that the lion Member for Enfield, West

(Mr. Parkinson) had risen. So now I call the hon, and learned Member for Ruislip-Northwood (Mr. Crowder).

Mr. Crowder: I am sure that hon. and right hon. Gentleman opposite would agree that although we have in the past been faced with the sort of problem we are debating tonight—whichever Government has been in power—we have not succeeded in finding a solution. I do not believe that we shall ever get very far in these matters without setting an example. If a person sets an example in life, others will follow him and accept him by their own standards. That brings me to something which I put forward with great diffidence. Would it not be a sensible thing in the circumstances to reduce, even by a token percentage, our own salaries as Members of Parliament?

Mr. Carter: Come off it!

Mr. Crowder: It is not something I would seek to impose on any colleague in the House because I am the last person to do so. I earn my living at the Bar, and everyone knows it. I make no nonsense about that. Even a token and tiny percentage would have an effect in the country, albeit for only six months or a year. It would indicate that we really do care—as the Labour Party has so often said at times of a General Election.
I wonder whether, through the usual channels, we could not arrive at some solution on that basis. However token it might be, it might have the effect of convincing the people that we really do care about these matters. I do not know what hon. Members opposite think. Those who earn anything outside of this House certainly should go into this 100 per cent. Those who do not should be exempted. I would not wish to see any unfairness in it at all. As Members of Parliament we have a duty to set an example to the people—

Mrs. Elaine Kellett-Bowman: Mrs. Elaine Kellett-Bowman (Lancaster) rose—

Mr. Ted Fletcher: Mr. Ted Fletcher (Darlington) rose—

Mr. Deputy Speaker: Order. To which hon. Member is the hon. and learned Gentleman giving way?

Mr. Crowder: Obviously to the hon. Lady.

Mrs. Kellett-Bowman: Would my hon. and learned Friend for Ruislip-Northwood (Mr. Crowder) consider it intolerable if, instead of Members of Parliament taking a token reduction, their pay for the next six months were to be tied in inverse ratio to the cost of living, thus giving us a vested interest in seeing that prices do not rise?

Mr. Crowder: I think that is a very nice idea.

Mr. Fletcher: Would the hon. and learned Gentleman advocate that, in order to set an example to Members of Parliament, the Bar Council might suggest reducing barristers' fees?

Mr. Crowder: I would be only too delighted—

The Speaker: Order. I hope the House will not tempt the hon. and learned Gentleman too far along these lines.

Mr. Crowder: I would be only too delighted to reduce fees by all means because fees do not matter. They all go in tax in any event at the end of the day. There is no problem there.
Hon. Gentlemen opposite have always been very kind to me when I have put forward somewhat unusual proposals. They know that I put them forward only because I really believe in them. Hon. Gentlemen opposite, I think, would be the first to believe with me that we shall never achieve anything politically in this House or, indeed, in private unless we do it by example. If the House of Commons were to have a token reduction over a very short period in the amount of money paid to Members of Parliament—which is not very much in any event, having regard to modern circumstances; I accept that at once—that leadership and example might have an effect throughout the whole country. All of us will be faced with this problem in future whether we are in office or out of office.
I believe there might be something in this idea. If I could get an agreement from hon. Gentlemen opposite on that sort of basis, however token or small the reduction was, then that might halt this ghastly process of inflation which is burdening the country to such a degree that almost no Government can face it except on the basis of the strikes now taking place. I put this forward as a proposition.

I invite hon. Members opposite to give their views.

Mr. Arthur Lewis: May I first thank you for your kindness, Mr. Speaker, in explaining what happened a moment ago. I am sure the House appreciated that.
Before dealing with the points raised by the hon. Member for Enfield, West (Mr. Parkinson), I must deal with the hon. and learned Member for Ruislip-Northwood (Mr. Crowder). I have never heard such drivel in all my life. Here he is, an hon. and learned Gentleman who comes along to the House much more frequently than some of his hon. and learned Friends but, with great respect to him, not so frequently as some of my hon. and learned Friends now sitting behind me, making the suggestion that Members of Parliament should have their salaries cut for a little while. One of my hon. Friends interjected, I think rightly, "Why not cut out outside income?". The hon. and learned Member replied—and this is rather significant—that if the Bar Council were to cut the fees of barristers he would be in favour of it because all he gets in outside income goes in tax.
The answer to all our problems is this then: give the railwaymen, civil servants, hospital workers and gas workers the same fees as the lawyers receive and let it all go in tax. I give the hon. and learned Gentleman the assurance that there would be no strikes tomorrow if all the railway workers were to get the same fees and the same refreshers as the hon. and learned Member receives when he goes to court.

Mr. Crowder: Are they worth it?

Mr. Lewis: I think they are more than worth it, with respect to my hon. and learned Friends. A chap who is driving a train and delivering freight and workers to and from their factories is much more important than a lawyer getting a £25 per day refresher fee or perhaps a 100 guinea a day refresher fee to decide whether some crooked speculator should or should not go to gaol. The railway worker is much more entitled to it.

Mr. Crowder: If the railway workers want the fees that we get at the Bar why do not they go to the Bar?

Mr. Lewis: The hon. and learned Member says that it is good enough for


some people to be able to get what they like. They will still be able to do so. They will still be able to fiddle, because no one will know what is happening. The lawyers have the greatest united trade union in the House. No lawyer in the House can tell me that lawyers' fees will be controlled. The hon. and learned Member negotiates his fee through his solicitor or managing clerk. That is fair, free negotiation. There is free negotiation for the lawyer, but not for the engineer, the bricklayer, the carpenter and all the other workers. The hon. Member for Enfield, West agrees that that is not fair. He could not have been here at Question time today, when the Prime Minister repeated that the policy is fair and that the people support it because it is fair. I do not know where the Prime Minister has been in these last few days. The civil servants, the teachers and the engineers do not think that it is fair. They are strongly opposed to the policy because they know that it is not fair.
Today I went to see the civil servants who are on strike. For the first time since the Civil Service was established 500 years ago civil servants have been on strike, with posters and picketing. Today I asked the Minister responsible for the Civil Service to state the rate of pay of the lowest-paid civil servant in June 1970, his pension entitlement after 40 years' service, and how those figures compared with the salary and pension of the Head of the Civil Service—the man who sent out a letter during this week telling the wicked civil servants not to strike. The reply I received contained illuminating figures that show up the fairness of the policy. On 30th June 1970 a female cleaner outside London had a salary of £12 18s. a week and a pension entitlement of £5 7s. 10d. At that time the Head of the Civil Service had a salary of £10,400 a year and a pension entitlement of £4,800 a year. On 31st December of last year the cleaner received £16·30 a week—a 30 per cent. increase—and a pension of £8·15 a week—an increase of about 50 per cent. What about the Head of the Civil Service? How has he done? At the same date he received £16,750 a year. What about the pension? It is £8,375—a 100 per cent. increase. Well might he support the policy. Well might he say to his cleaner,

"You wicked girl, to go out on strike." That is the crookedness and dishonesty of the Government. They know that the policy is crooked, dishonest and unfair.

9.15 p.m.

Mr. Crowder: Does not the hon. Gentleman agree that at this moment it would be right for Members of Parliament to accept a token reduction?

Mr. Lewis: No, because the whole thing is crooked, as I shall explain. The Government could take action, but they refuse. They take action, when it suits them, only against the lower-paid workers. The gas workers have been quoted. I saw in the Daily Telegraph only this week a letter from David Bassnet, the secretary of my union—I declare an interest; I am a member of the union—who mentioned that the gas workers came here lobbying. My hon. Friends and I took the trouble to go to meet them and discuss the question with them. There were 20, 30 or 40 other hon. Members who never took the trouble to go out and see them. There happened to be a Three-Line Whip here. I went through the list of those who did not go out and found that almost every one had outside interests, and made more, in salary, from their outside interests than they received as Members of Parliament.
What a crooked thing it is to suggest that the salary of a Member of Parliament should be cut, when one knows that the person making the suggestion is getting three or four times that amount on a part-time basis outside. But let us not bring in Members of Parliament. When I raised a Question in the House the Government refused to take action. This is nothing personal; it is an illustration of a particular case to give point to the general. A one-time great footballer is a commentator on ITV—a chap called Jimmy Hill. He is a part-time commentator, receiving £10,000 a year. He has decided, by arrangement, to go to the BBC and do a part-time commentating job for the corporation at £22,500. The Government have been asked to take action on this case and they have refused. What do the Government feel will be the reaction of workers in the BBC who have given their life to serving the BBC and who have been told that they cannot have any increase, and who then find that


a chap can come in overnight and get £22,500? Is it not obvious that Mr. David Coleman, Mr. Peter Dimmock and all the others already in the BBC will say, "If we are working here for £10,000 or so and we find a chap coming in and making £22,500 overnight, is not this inflationary?" Yet when I asked the Government to take action they refused.
We had the same thing with regard to the chairmen of boards, in terms of the number of instances of which one can read in company directors' statements and company reports of company directors' fees rising by 100 per cent. or 200 per cent. We are told that the teachers should be looked after. In my constituency we have a great shortage of teachers, for various reasons. One is because the salary is not worth having; another is because there is a grave housing shortage, and a third because the London teachers' allowance is not sufficient to compensate for the housing difficulty. So we are now finding that teachers are leaving the area because they cannot afford houses. What happens? The Government do not attempt to help. Even though both employers and teachers have agreed to the payment of an extra sum, the Government come forward and in that instance they stop it. They cannot stop the others to whom I have referred.
I believe that we see too much evidence of there being one law for the rich and another for the poor. Those who have, can have and still have. One cannot get facts and figures about what is happening. I noticed in the Estimates that the salary of a clerk in the Department of the Clerk of the House had been increased. When I tried to discover how and why I was told that I could not ask Questions on the matter and that no information was available.
The hon. and learned Member for Ruislip-Northwood suggested that hon. Members should take a cut in salary. I have a better proposition. Every member of the House of Lords gets £8·50 a day tax-free just for poking his nose into the House of Lords. He does not have to do any work. It may be that he has a job as chairman of a State board at a salary of £20,000 or £30,000. He may have a part-time job on some advisory committee, for which he gets £1,000 or £1,500. So it goes on. I suggest that we

might save some money and set an example by proposing that people of that sort have their salaries cut.
In an earlier debate we talked about the Bank Rate and the way that the banks have made 50 per cent. for profit. The funny thing is that almost all these bankers are Tories, or Tory supporters. Of course, they are quite happy. The Bank Rate has gone up. They are making fabulous profits.
This is so unfair. What is more, it is obviously unfair. It is known to be unfair. The poorest of the poor, those on the lowest incomes, are the very people against whom the Government's present policy is religiously and vigorously enforced. Those in the higher incomes groups find that the higher they get the better off they are and the less the action taken against them.
Then there are the Government themselves, who pretend by shedding crocodile tears over the poor old-age pensioners, the sick and the disabled. What do they do? In April of this year they will give hundreds of thousands of pounds in surtax relief to the very wealthiest of the population. The hon. and learned Member for Ruislip-Northwood said that they were taking cuts. It would have been better if the hon. and learned Gentleman had voted with the Opposition when he had the opportunity, in an attempt to stop these large surtax repayments. Even better, the Government could set an example and say that they will not allow these large surtax repayments and intend to take action in the forthcoming Budget to prevent them.

Mr. Crowder: Does not the hon. Gentleman agree that it is for Members of Parliament to set an example, and that even a very small token cut might steady the inflationary situation?

Mr. Lewis: I agree that a token might be a good idea. But where does it start? In any event my suggestion would be to take token action against property speculators and to make sure that surtax payers who will be getting these large handouts do not get them. The hon. and learned Gentleman had a chance to vote with the Opposition on this matter. He failed to take it. That chance came with the last Budget. We may have another chance on the next one. I hope that the


hon. and learned Gentleman will support the Opposition then.
We find the Government claiming that everyone is out of step except "our Ted". I do not agree. I believe that "our Ted" might be the one who is out of step. It is just possible. One of my hon. Friends drew attention to the fact that last November or December, when the freeze was on and there was an attempt to cut back, we heard references to "setting an example". At about that time I happened to hear the radio programme "Any Questions" one Friday. One of the panel on that occasion was the right hon. Member for Taunton (Mr. due Cann). In the course of his reply to one question he said that we ought to have a vigorous attack on inflation and try to set an example. The newspapers which reported that he had just bought a £60,000 yacht also carried reports that the Prime Minister had bought a £40,000 yacht.
A gas worker can work for 40 years and still not earn the amount that one man can spend on a yacht. Yet that man tells him: "Do not be greedy. Do not ask for too much. Do not hold the country to ransom." The ex-Chairman of the Tory Party can spend £60,000 on a yacht, but it would take the average working man or woman more than a lifetime to earn that amount. Is this fair? Of course not. The people of this country know it is not fair. That is why this policy must ultimately fail.

Dr. David Owen: At this moment in my constituency and many others thousands of people are taking industrial action for the first time in their lives. Many of them are taking this action reluctantly. They never expected to find themselves in this situation. The House should ask itself why this situation has occurred. I ask the Secretary of State for Employment, when replying to the debate, to consider the psychological background against which we are debating this serious problem. I suggest that the Government have totally failed to understand the deep feeling of bitterness and resentment at this policy which is being foisted on the country.
I speak as a firm and resolute supporter of a prices and incomes policy. I have always supported such a policy, although at times it was applied by the

Labour Government in a way that I did not fully support.
It is well known that on both sides of the House there are hon. Members who were root and branch against and consistently against a prices and incomes policy, as an unwarranted interference in either a market system or a collective bargaining system. I respect their consistency of view. The trouble is that as one prices and incomes policy follows another those people gain more supporters because of the lamentable failure of such policies judged overall since the war.
The major problem is that immediately we accept a prices and incomes policy we put ourselves in a straitjacket. With each prices and incomes policy successive Governments have tried to make the straitjacket even tighter, even more rigid and inflexible.
We reach for a prices and incomes policy only when the economic situation is desperate, and we ask of that policy what it cannot possibly deliver. In consequence, we are upset and disillusioned when it fails. A prices and incomes policy can operate only in the long term. It is not a major short-term manipulator of the economy. It has to operate, to be successful, in a climate of consent. It must have a major element of voluntary support.
I am not against, and have never opposed, the concept that a prices and incomes policy, fairly applied, must have some form of statutory backing. Of course, it must apply to both prices and incomes. The current policy is statutory on incomes but it has had no impact upon prices. However, that is not the problem. This policy will fail because it was born out of failure.
It does not lie in the mouths of right hon. and hon. Gentlemen opposite to lecture the Opposition about a prices and incomes policy, about the need for restraint, and all the humbug that has been pouring out of some Government spokesmen over the last few months.
I will support a prices and incomes policy that is fair. I will support any policy which is designed to try to curb effectively inflation. The present policy is not. It fails to meet almost any of the criteria for success. It comes from a Government who do not believe in a


prices and incomes policy—who do not see it against the background against which it must be introduced in this country, as a long-term way of changing the basic inequalities in British society.
It must be done slowly, because it has to be done voluntarily. It must be done by consent, but it must be done with conviction. A Government who, when in opposition, opposed in a most hysterical way any form of prices and incomes policy, are not capable now of asking of the country the moral restraint that is necessary for such a policy. The Government do not have the necessary fund of good will or consent. That is why this policy will fail. As it gets more Draconian and detailed, so the failure will become more and more obvious.
9.30 p.m.
My plea to the Secretary of State is that the hope of this policy lies in his lowering his sights, claiming success for it only over a much longer period, taking on immediately a far more flexible approach and looking at the present wage claims with far less rigidity. Instead of relying on formulae the right hon. Gentleman should be taking each case on its merits. Of course, it will occasionally have unfairness in its application, but the right hon. Gentleman has already admitted that it has unfairness in its current application.
This Government, like the Labour Government, have got away with a six months' freeze. The country, broadly speaking, was prepared to accept that, but I believe that it will not accept, without a deep-seated resentment building up, the current policy for phase 2. The sooner the Government introduce greater flexibility into it, the sooner they are prepared to recognise the causes why civil servants are currently taking industrial action, the better.
The same applies to gas workers and hospital workers. I know from my own experience that hospital workers have worked on low pay for years and years, and—to their own detriment—have never sought to organise themselves. Their wages have been allowed to lag woefully behind, and they have worked long hours. All these people are fed up and frustrated, and the sooner the Govern-

ment realise it the sooner they will get the country to accept that a prices and incomes policy has a sensible place in the way we run the economy. But we should not make for such a policy over-vaunted and, in my view, absurdly optimistic claims. What statutory backing there has to be is largely to cope with the rogue elephants. It is not detailed statutory backing that is needed. The more detailed the policy becomes, the more in many respects, it is doomed to failure.
I ask the Government to realise that if they are now going to try to get the country to accept this type of policy—if we are to have any success in the fight against inflation, they will have to look into the hearts and minds of people. Their past dogma and doctrine will have to be thrown out through the window. They will have to have a more flexible, reasonable and sensible approach to this and many other problems. They cannot dissociate whatever policy they bring before the House on prices and incomes from their other policies, on taxation and housing, for example, or their overall attitude to inequalities in this country.
Unless and until they see this policy in the round, for the long term, they will fail. Their failure will be the country's failure. All that will happen is that inflation will go on, bitterness will increase and disillusionment with any form of political solution to many of these problems will increase with it.
Many hon. Members on this side are prepared to support a policy which will do something to redress inequalities in this society, but they are not prepared to see a policy foisted on many people who will have to make real sacrifices. The inflation in prices is not fully understood by hon. Members opposite, particularly the way it hits a man who may be taking home what sounds a reasonable wage—say £30 a week—who has two or three children and who is facing an ever-increasing spiral in the price of those things which constantly have to be bought, week in and week out, in rents, rates and other things. Inevitably, he eventually claims for improved wages. Unless the Government can recognise that now and recognise it very quickly and come off the rigid incomes and wages aspect of their policy it will fail. Therefore, I hope that the Secretary of State, before it is too late, will introduce a


policy which does not have this minute attention to detail, this attempt to do the impossible but will go back to reason and to flexibility. If he does that maybe the policy will succeed. Maybe then we shall see an easing of the general frustration and ill-feeling that exists. The current policy and the current framework which the Government have introduced is doomed to fail and I believe also that the Government are doomed to fail. The sooner they recognise that a substantial re-think of their basic economic policies has to come the better for the people of this country and for the House.

Mr. Hugh Dykes: Mr. Hugh Dykes (Harrow, East) rose—

Mr. John Mendelson: I want to concentrate on one point only—

Mr. Dykes: On a point of order, Mr. Speaker, I apologise for intervening at this juncture but you have now selected three hon. Members on the Opposition side in turn.

Mr. Mendelson: No one one stood up.

Mr. Dykes: I stood up.

Mr. Speaker: Order. This is a matter for me. Mr. Mendelson.

Mr. Mendelson: I wish to concentrate on only one point which I wish to put to the Secretary of State as strongly as I can. The other day at Question Time I referred to those hon. Members of the Cabinet and the Government who are specially charged with the policies of industrial conciliation. I did so in the absence of the Secretary of State for Employment who was otherwise engaged, as we in the House all knew. I want to repeat the point for the right hon. Gentleman now, as he was the responsible officer I had in mind, as well as his colleagues in his Department.
We have built up over many years a carefully designed system of indusstrial conciliation that many people in industry have relied upon and regarded as an essential part of the civilised way of doing our daily work. The great danger in this legislation as I see it—and as the House will know I saw this danger in similar legislation brought forward by my right hon. Friends when they formed the Cabinet—is that it introduces a rigidity which excludes the ordinary

processes of conciliation. I regard this as the most dangerous aspect of the Government's attitude and consider that it is largely responsible for a great many of the serious industrial developments which we have been seeing in recent weeks, and particularly this week.
I know that the right hon. Gentleman is in difficulty here. I have no intention of making any cheap political tactical point. The matter is far too serious for that. But I realise the particular difficulty in which he finds himself being at one and the same time a member of the body which collectively decides policy—the Cabinet—and head of the Department which contains the permanent officers, the chief conciliation officer and all his staff.
This morning I received a letter from a gas worker, a gentleman who has never written to me before. He says,
As an employee of the British Gas Corporation residing in the Oughtibridge ward of Penistone, I would like to take this opportunity of writing to you to request that you raise the question of the gas employees' case in Parliament, and to explain to you the gas employees' case more precisely than has been published in the local and national press. A few years ago gasmen, as we are termed, considered themselves to have a well-paid and secure job, but today circumstances have made this position entirely the opposite. In 1967 with the introduction of natural gas the then Gas Council claimed that the new found fuel would bring more prosperity to the country, the Gas Board, its employees and to the consumer. The gas employees entered into the conversion programme with complete enthusiasm and carried out conversion of industrial and domestic premises with speed and efficiency, especially in the Sheffield area. A job scheduled to take 10 years was completed in four years. The prosperity natural gas brought to the Gas Board was increased productivity, a profit of some £15 million and reductions were also made to all consumers.
He continues:
The promised prosperity it brought to the gasmen were in redundancies of 22,000 and for those still employed £22.84 a week, less in some cases, which after stoppages result in a take-home pay of £18.50. What a glowing tribute—and I quote—to 'the prosperity of natural gas'.
That is the letter of a reasonable man who over the years has done his work. He now makes his appeal, which is typical of many of the people who work in an industry which has not seen a strike for over 50 years.
My constituent in his letter asks me to ask the Government to set up a court of inquiry into the position of the gas


workers. The Government have many times rejected the setting up of a court of inquiry. They argue that if we are to stick to the provisions outlined in the Bill there can be no room for a court of inquiry. If they say that, they are at the same time suspending all the long-built-up conciliation machinery at a moment when there is no other such machinery in existence. We are in a hiatus. The danger of the last few weeks is that the Government have stubbornly refused to use the conciliation machinery which we have built up over 60 years, and there is no other machinery available. All the talk about setting up the Pay Board in advance of the board starting its work, and all the difficulties that the Secretary of State for Employment has faced in his sincere efforts to find an approach that would get the Government and the country over a number of dangerous difficulties, failed completely because the right hon. Gentleman was not in a position to authorise or to offer the use of established conciliation machinery.
That is a policy of madness. There is no justification for putting prestige and an attitude of firmness against the realities of the immediate situation. The right hon. Gentleman should assert himself. The present situation demands the use of his chief conciliation officer, his assistant conciliation officers and himself as leader of them all.
It is necessary to accept the proposals of the gasmen and other moderate people in the trade union movement who have shown their interest in the industry in which they work over many years, and to accept the proposals to use as of tomorrow the existing conciliation machinery.
It would be unreasonable to ask the right hon. Gentleman to do anything or to say anything that would weaken the Government's attitude to their legislation. We have all been here long enough to understand that no Government can do that. That is not the proposal that I am making. I am asking the right hon. Gentleman to say that this is an extraordinary situation which represents a grave danger to industry and to this country, which fully justifies reconsideration by the right hon. Gentleman's Cabinet colleagues and a declaration that we shall use all the machinery, including

a court of inquiry, to get over these difficult weeks.
The Minister has tried, but the proposal merely to set up the members of the board earlier than the legislation is enacted does not get him over the difficulty that any decisions, after consideration which the Pay Board might give, cannot come into effect until the autumn. That is too long to have to wait. The Government would lose no prestige—except with the leader writer in the Sunday Express, which they could well afford—if they made a declaration tomorrow that they realised the special difficulties of this situation and have reconsidered the usage of existing conciliation machinery until other machinery comes into effect.
9.45 p.m.
It will remain our case that the legislation is misconceived, but I am not dealing with that now. That is common ground on the Opposition side of the House. I have yet to meet many employers in my area who do not share the Opposition's view on this legislation. We believe it to be misconceived. But there are situations when other factors even more important than the immediate view of a pending Act of Parliament intervene. I say with profound conviction that we are in such a situation and that it is up to the right hon. Gentleman to see that immediate action is taken to use the channels of conciliation that exist today.

Mr. Hugh Dykes: I want to intervene only briefly. I hope that the hon. Member for Penistone (Mr. John Mendelson) will forgive me if I do not refer in great detail to what he said.
I am more concerned—as many other hon. Members would have said had they been called—with the unusually muddled approach of the hon. Member for Plymouth, Sutton (Dr. David Owen). He was clearly, in a paradoxical way, not making himself clear about precisely what he felt on a prices and incomes policy, the Government's policy and what would be the Opposition's alternative suggestions. All of us respect the hon. Member normally for the clarity of his views. But on this side of the House, at least, there is a feeling of considerable disappointment, because what the hon. Member said was misleading as well as muddled.


It was misleading because he failed to make clear what he was getting at on the subject of a prices and incomes policy, what the Labour Party would have done in a similar situation, and why he was objecting to both the broad brush of the present Government's policy and to what he referred to as some of the minute details.
This is the biggest danger for those on the Opposition benches, who attempt to construct a policy that they may regard as viable Opposition in some way and yet have nothing constructive to say in the context of what the Government are trying to do.
We are all speaking frankly in this frank debate That does not mean, however, that there are not some of my hon. Friends who have considerable misgivings about some of the details of this policy. None the less, it is above all manifestly clear, beyond any doubts that are more than merely marginal or relative, that the overwhelming mass of the British public are now looking to the Government, even if they are not normally Conservative supporters and even if they feel disgruntled about what the Government have done up to the stage of phases 1 and 2, at long last to do something about the problem of inflation.
This central problem assumes a national character which transcends party feelings. There are of course party and philosophical differences, but if the Opposition seek excessively to undermine the potential success of this policy of restraint up to the beginning of phase 3 they will bear a heavy responsibility.
No doubt many hon. Members, if they speak honestly and frankly, will feel uncomfortable about the minutiae of the policy. There are some employers—employers who might be said by the Opposition to be traditional Conservative supporters—who may now say that enormous anomalies will be created because of the base reference date of 1st April in terms of the five-year test of profit margins. They may well feel that that is arbitrary and unfair. Furthermore, on the other side of the coin, the gas workers have a considerable case to argue over their own remuneration when they refer to their record and their responsible attitude. I am sure that all fair-minded Members will acknowledge that to be true. However, in implementing a

policy of this nature, unfairness manifests itself in a crude way.
The central problem which we face in these debates is much more weighty in the overall success of the policy given the number of months which will be needed to take us from phase 2 into phase 3 in the longer term. I believe that the Government are right to seek power to deal with the situation in the longer term. The situation admits of some unfairness and crudity, and in certain sectors the policy will be grotesquely unfair. This will affect unions as well as employers and will involve the distributive services as well as the service industries. It is a policy which is bound to be arbitrary and unfair in giving the country a breathing space.
As a London Member I have the greatest sympathy with the London teachers' case. They wish to have a device under which the pay board can be set up as a provisional nucleus before it comes into statutory effect so that the board may examine the various arguments. Furthermore, the railwaymen for their part adopt arguments which relate to the overhang from a period which ended on 5th November 1972. I wish to emphasise that we now face a new era, and in that sense I hope that the House will seek to espouse new arguments.

Mr. Neil Kinnock: The hon. Member for Harrow, East (Mr. Dykes) and I came into the House on the same day, and I believe we made our maiden speeches on the same day. In that sense, in parliamentary terms we can be said to have that much in common. But the hon. Gentleman has arrived at conclusions about the nature of political divisions which differ from my conclusions.
The hon. Gentleman's analysis appeared to be based on the fact that the crisis of inflation is so monumental that it should lead Members of all parties to treat the matter as one which transcends party differences. I strongly differ from that opinion, although it might be said that one or two of my right hon. and hon. Friends would not agree with me. This is a matter of almost elementary difference in terms of interpretation of the way in which the economy should be run and from where the crisis springs.
We have rehearsed the diagnosis of inflation frequently in past debates, and I should be out of order in further pursuing it, and shall not do so. I am sure we shall have further opportunities to undertake debates on that subject in the future. But I want to take up what my hon. Friend the Member for Plymouth, Sutton (Dr. David Owen) said. He said that the Government had to discover that they could not hope to undertake and run an efficacious, satisfactory prices and incomes policy without consent, without flexibility. I think the Government have already rumbled that fact and that there is no administration in history which has been more acutely aware of the need for consent and consultation in its application of policy.
The difficulty of this Government is that, while they are aware of the need for this, they seem to be almost biologically incapable of carrying out their good intentions. They have almost grotesquely misapplied the whole concept of fairness repeatedly in many of their policies over the past two and a half years. The chief instances of these distortions have been the Housing Finance Act and the legislation we are discussing tonight.
It is not a question of semantics, of what we mean by being fair. It is a case—and that is why I say it is a matter of very deep political division between the two parties—of deciding as Members of Parliament whose interests and which interests we represent. I say to my hon. Friend the Member for Plymouth, Sutton that if, as he said, we tried to be reasonable, if we tried to adopt consensus attitudes, if the Labour movement outside this House were to adopt such attitudes, I am sure that the apparatus which the Conservative Government are now constructing as part of their counter-inflation policy would roll right over all the democratic elements of free collective bargaining and parliamentary accountability.
So we cannot afford on this side of the House to be sweetly reasonable. We must undertake to represent a partisan interest. The division between us is this: I believe, and I think that most of my hon. Friends believe, that we are here to represent, to defend and to extend the interests of working people. Our major criticism of this counter-inflation policy—and this

is why these amendments are down on Report—is that the Government have decided deliberately and consciously to restrict the incomes of one sector of the population while doing nothing effective or significant as far as other sectors of the population are concerned. When the population of this country has been so consciously divided into interest groups by the very legislation we are discussing, we cannot be expected to be non-partisan and to adopt consensus postures when debating issues such as this.
The first stage of the Government's persuasive technique was to use the idea of presenting a paranoiac obsession with inflation. Certainly inflation is an important problem, but we now have an exclusive obsession with the problem, so that all our attitudes, policies and thinking seem to be devoted to one thing. I suggest that this serves a very useful propaganda purpose, although it is a remarkable deceit and conceit which permits the Government—who in many respects have been more responsible than most elements in the economy for creating and generating this inflation—to be at the same time the wolf and the boy who cries "Wolf". There is an obsession with inflation. The Government employ the technique of talking about fairness and consultation, neither of which, when put to the test, have any meaning. Therefore, the Prime Minister—

It being Ten o'clock, the debate stood adjourned.

Ordered,

That the Counter-Inflation Bill may be proceeded with at this day's Sitting, though opposed, until any hour.—[Mr. Jopling.]

Question again proposed, That the amendment be made.

Mr. Kinnock: The Prime Minister a fortnight ago and the Home Secretary last night found it necessary to rattle their sabres. The Prime Minister said that compromise was an option that the country could no longer afford. Last night the Home Secretary became an economic jingoist. He said that he did not want confrontation, and nor did the Government, but if it became necessary, if they had to stand firm, that was what they would do. There was a popular song before the First World War:
We don't want to fight, but, by jingo if we do


We've got the ships, we've got the men, we've got the money too.
To tell a 10-million strong Labour movement, "We don't want a confrontation, but we are prepared to take you on", seems unusually heroic for the Home Secretary, with the kind of personality that he tries to present, but it betrays a certain attitude by the Government.
After hearing the hon. Member for Enfield, West (Mr. Parkinson), I began to understand how much insistence there is from the Conservative back benches that the Government shall adopt a strongman posture. Even if the Government are fulfilling the expectations of their back benchers, they are not fulfilling the expectations of the nation at large. The hon. Member for Harrow, East said that the nation was looking to the Government to give a lead. If it is looking to the Government for anything, it is for them to get out so that alternative policies may be tried—[An HON. MEMBER: "Rubbish!"] I doubt whether the hon. Gentleman would find even solid Conservatives who would not confess that the Government's position in the country, their credibility, is in the shakiest possible state. Among the labour movement, in the battle that the Government have chosen, they would find no support. Over 2½ years, with greater frequency and drama more recently, the Government have managed to offend large sections of the labour force.
Someone has said that the Opposition have wept crocodile tears over lowerpaid workers. Everybody is subjective about his or her income. The term "lower-paid" is subjective and relative. The workers who are making the present pay claims strongly believe themselves to be among the lower-paid sectors of society. They have been listed tonight—the gas workers, the teachers and the engine drivers. Either in relation to other working groups or the kind of responsibility or work they undertake, they believe that they are not sufficiently well paid.
It could be a matter of scientific fact or merely that they believe themselves to be special cases needing special treatment. The important fact is that they are in a position to act on the basis of that belief, and the Government have nothing with which to answer them. The

Government cannot inspire trust or confidence and do not even have the guts to make a stand-up fight, because they know that they would lose.
Rumours have been spread and statements have been made that it might not be a bad idea for the Government to call a General Election on the basis of a confrontation with the unions on the issue of who runs Britain. As has frequently been said by Opposition Members in recent debates, if the Government are confident that that is how the election will be fought, let them call that election. The Government having failed both by letting rip and by their attempts to introduce a corporate State, with impositions on free collective bargaining as a means to try to control inflation, the only resolution to the continuing problem of inflation is for one party or the other to have a true mandate by fighting an election on the basis of the counter-inflation policy that it presents. Anything short of that cannot possibly have the kind of trust or confidence or consent that my hon. Friend the Member for Plymouth, Sutton talked about because the Government have now destroyed the mandate they sought in 1970—and there is an alternative to be presented. My hon. Friends and I will cheerfully and confidently present that alternative.

The Secretary of State for Employment (Mr. Maurice Macmillan): The confidence of the Opposition in the by-election results may have been reflected in the majorities achieved during the course of this debate.
The first two of these amendments which we are collectively debating would make the Pay Board an advisory body only, while leaving the Prices Commission statutory. The third goes further to this same end by leaving out all the powers of the Pay Board, and the fourth retreats somewhat and seeks, following the argument of the hon. Member for Penistone (Mr. John Mendelson), to exclude from the Pay Board's counsels any remuneration that has been adjudged by an independent court of inquiry appointed by the Minister. We must ask the House to resist these amendments, for reasons which I think have emerged during the debate.
The argument has centred on two main points. The first is that no statutory


policy can work, or should work, or ever has worked. That argument was put forward by the hon. Member for West Ham, North (Mr. Arthur Lewis) as well as by the hon. Member for Salford, West (Mr. Orme)—that there should be a statutory policy for control of prices and no policy whatever other than free collective bargaining in regard to wages. The general attitude throughout our debates upstairs and in the discussion in the country, by both the Opposition and the trade union movement generally, has been that we should have statutory control of prices but no limitation at all on free collective bargaining in wages. This, as was pointed out by my hon. Friend the Member for Enfield, West (Mr. Parkinson) is complicated by the problem of nationalised industries financing.
The fact is that no real viable alternative has been put forward by any hon. Member opposite, or by the unions, to policies which the Government are seeking to pursue in this Bill.

Mr. Atkinson: The Prime Minister and a number of his right hon. colleagues consistently argue that this is not a viable alternative. Will the right hon. Gentleman tell us in a few words why it is not a viable alternative argument that there should be free collective wage bargaining against price ceilings?

Mr. Macmillan: Because by various means it has been tried from time to time—in declarations of intent, and so on—and has been proved to be totally incompetent in controlling information. When such success as there had been was abandoned, this was one of the difficulties that led to the high rate of inflation obtaining in June 1970.
The second group of arguments suggested that we should bring into phase 2 the flexibility and the manner of dealing with anomalies which we are suggesting for phase 3 in the autumn. The hon. Member for Penistone appealed to me, as being responsible for conciliation, to use my position to out-argue my colleagues in the Cabinet in order to make possible a more conciliatory approach to the gas workers. The difficulty is that this is not a split in intent between myself and other members of the Government. If there is any schizophrenia it is within my Department, because we are

not only a Department for conciliation, we are charged with carrying out the pay side of the policy. That has been the case under successive Governments, and there is nothing new in it.
The hon. Gentleman put the case of the gas workers with considerable skill and moderation, and rightly expressed the moderation in which the letter which he quoted was written. That, indeed, was the tone of the discussions of the problems which I had at great length with the unions concerned. But there are other special cases as well, as the right hon. Member for East Ham, North (Mr. Prentice) and other hon. Members recognised.
The difficulty is that any sort of inquiry which the hon. Gentleman seeks to establish now would judge not only the particular case of the gas workers. I have sought to explain the situation elsewhere. The hon. Member suggested that it was a little late, but it was the same explanation that we have given all along. We have explained that such a proposal does not deal with the question of the relationships of each of these special cases one with the other. But I do not want to repeat the argument at length, because we discussed it fully in Committee.
It has been recognised by my right hon. and hon. Friends far more than by right hon. and hon. Members opposite that the most unfair system of all is represented by the sort of wage-cost inflation which we have been suffering for the past year. The hon. Member for Bedwellty (Mr. Kinnock) called it "almost an obsession", and spoke as if it were a problem peculiar to this country when, on the contrary, it has been the experience throughout almost the whole industrialised world.
The hon. Member for Salford, West suggested—and I refute it now as I did in Committee—that my right hon. Friend the Prime Minister, as Minister for the Civil Service, was in some way guilty of breaching an undertaking he had given. But it was clear in that agreement that his undertaking was subject to the overriding application of policies of a national nature applying across the board. I do not think that there has ever been doubt about that.
The hon. Gentleman also referred to ASLEF, and the promised restructuring.


I am not totally familiar with all the details, but I suggest that it was a longer-term programme of restructuring and that it should have come as part of a general wage claim. In some ways it is a pity that ASLEF was unable to finish its own discussions in time to join the other two unions in the railway negotiations in their meeting with the British Rail management, which was due to have taken place today but could not, because of the absence of one of the unions.

10.15 p.m.

Mr. Orme: May I take up the point about ASLEF? The unfortunate thing is that it was not allowed to continue the negotiations. The terms of reference of the National Joint Negotiating Committee applied specifically to footplatemen. It is the freeze and phase 2 which is preventing a settlement. That is the point that the Minister must answer.

Mr. Macmillan: Phase 2 is preventing the footplatemen only from pre-empting some part of the total payment available for the industry. The hon. Gentleman raised the question of the legality or otherwise of this. I should make it clear that the payment, as at this moment in time, of any claim would be contrary to the provisions of the 1972 Act. If the payment were continued and were above the pay limit in stage 2 after the 1972 Act is brought to an end, following the Royal Assent to this measure and the implementation of the code, the pay claim could be prevented under Schedule 3(8) of this measure.
What is completely legal is to reach an agreement now to pay at the end of the standstill. The hon. Gentleman is correct in saying that this could be rolled back—that the extra payment could be stopped, not retrospectively, but from the date of the order being made. I hope that has made the position clear.
The hon. Member for West Ham, North was attacking the entire system and not simply the Government's present policies to counter inflation. He was saying that, basically, the whole capitalist concept is totally unfair. He quoted the case of a commentator who received a large increase in part-time payment as being an example of the reason why chairmen of boards and other part-time workers earning large amounts would not

be affected by phase 2. I refer him to paragraphs 104 and 105 of the Consultative Document, which says quite clearly:
In cases of individual promotion for regrading, an increase commensurate with greater responsibility or greater effort may be given outside the pay limit. Where this test is not satisfied any increase in pay counts against the pay limit. The cost of any general regrading scheme will count against the pay limit. Artificial regrading and changes of job specification should not be used as a means of avoiding the provisions of the Code.
There is the question of new employees and recruits. Paragraph 105 says:
New recruits to existing jobs should not be paid more than those they replace or more than the rate paid currently by the employer concerned for the same job.
Paragraph 106 says:
The rate for new work should not be more than the current rate paid in the locality for the same or most nearly similar work by the same or other employers.
In practice this cannot be applied to those whose talents are such as leads the BBC to offer twice as much as ITV for their services. This may be a commentary on the policy of the BBC, and I would not seek to defend its action in this way. It is not an indication that company directors and others will escape the consequences of the pay policy, because they are clearly limited by the £250 limit. If they are doing various part-time jobs, that amount has to be split between those jobs.

Mr. Arthur Lewis: If, as the Minister admits, the BBC can get away with this and is doing so, what is to stop the XYZ firm asking the worker who is working at, say Fords, to come in and do exactly the same job that he is doing at Fords at the XYZ company for double the salary? Nothing at all, because the same thing can happen, yet the Minister quotes the BBC as an example.

Mr. Macmillan: The simple point is that in the case the hon. Gentleman has quoted paragraphs 104, 105 and 106 of the code would prevent it, because the work there is comparable.

Mr. Lewis: It is exactly the same.

Mr. Macmillan: Where it is not possible to prevent this is in the case of highly-paid entertainers who have a value put on them by different organisations to which they may seek to apply.

Mr. Bruce-Gardyne: I have been thinking about what my right hon. Friend said regarding the legal position on pay settlements overlapping phase 1 and going into phase 2. Can he spell this out clearly? Am I right in understanding that if Fords now negotiated a £10-a-week increase with its employees it would be illegal for the company to pay that increase during the period of phase 1, but that it could pay the increase as soon as phase 2 began, although subsequently the Government might pass an order preventing Fords from continuing to pay it? Nevertheless, between phase 1 and the passage of the order to prevent the company from continuing to pay it, Fords would be entitled to pay it. Is that the position?

Mr. Macmillan: To be strictly accurate, if Fords were to pay such an increase now, it would not itself be illegal, but it would be illegal to go on paying the increase after an order or notice had been received telling the company not to do so. That restraint can be continued to cover the gap mentioned by my hon. Friend under the powers contained in paragraph 8 of Schedule 3. The standstill powers under the 1972 Act remain in force until the capacity to give an order or notice under this Bill comes into being.
I hope that has made the position clear to my hon. Friend.
The right hon. Member for East Ham, North almost made the point for me. He was asking both me and the Government to be more flexible in the pay policy during the months immediately ahead, and he talked about trying to get a new system.
We are now in the new system, and no longer in a standstill, and that implies choice—choosing between merits and requiring changes and suchlike in differentials. He welcomed that part of the pay code contained in paragraph 120 which gives a degree of flexibility in the conclusion of long-term settlements.
In paragraph 123, to avoid any misunderstanding, the cost of such increases will count against the pay limit. Where the cost equals or exceeds the pay limit, there is no further increase of a kind which in itself could count against the pay limit that may be paid to the group during the following 12 months. In other word, it exhausts the capacity within the

limit during the 12 months' period on which the code is based.
The right hon. Member pointed out the London teachers, the hospital workers, the civil servants and a number of other cases which have been quoted. He also referred to productivity and the need to maintain the system of improving productivity. Again, this point was covered in Committee. I entirely agree with it. But the code does not prevent the conclusion of productivity agreements which have started, and are being applied under a system which obtained before the standstill, and where those are brought in at different periods and to different parts of the same firm. The position is set out clearly in the appropriate passage of the code.
What are prevented during stage 2 are new productivity agreements. The matters which have been raised are matters intended for stage 3. That is precisely why stage 2 has been made relatively short. When the Pay Board is set up it will be able to deal with the anomalies and difficulties—especially those arising out of the standstill and stage 2.
The hon. Member for Salford, West suggested that we followed the American pattern too closely. We have learnt a great deal from the American commissions, and from other countries. I hope that we have also learnt from the mistakes of past Governments. The hon. Member for Bedwellty, when he derided the need which the Government have stressed to stand firm at this stage of our counter-inflationary policies, was perhaps forgetting the result of the Labour Government's not standing firm.
My hon. Friend the Member for Harrow, East (Mr. Dykes) is right in saying that the country generally welcomes these policies to counter inflation. Sympathetic as I always am to the arguments put forward by the hon. Member for Plymouth, Sutton (Dr. David Owen), I thought that this time he slightly confused the issue by constantly referring to the past or the future. He suggested that we should have sought a measure of agreement, that we should have consulted the unions and work people generally on the management of the economy and on the social policies we should follow. He said that we would have done better with a voluntary policy operated entirely


by agreement with the unions and the employers. That is precisely what we sought for so long with the tripartite talks.
The hon, Member for Bedwellty referred to the Housing Finance Act and other legislation. During the tripartite talks the Prime Minister made it clear that the effect of this type of legislation could be taken account of and that what we were unwilling to do was to repeal that legislation.
The hon. Member for Plymouth, Sutton also forgot the offer which was made by my right hon. Friend the Prime Minister to the unions and the employers of consultation on those aspects of the management of the economy that particularly affect them. We tried to do what the hon. Gentleman suggested, and it was the failure to achieve that voluntary agreement that led to the need for the standstill. During the standstill we are seeking to maintain a rigid control of prices, and there have been complaints from my hon. Friends that there are those who find this price control almost too rigid while at the same time we are allowing an increase in wages amounting to just over 7 per cent. across the board.
We are moving from stage 2 to stage 3 in the autumn. The Pay Board will start operating as soon as the Bill is passed. Officials are now busy on the preliminary work of studying the sort of cases which have been referred to. The Government will be seeking advice from the board on the anomalies and also on how best to establish the criteria for the stage 3 code, which will be debated in draft by the House and on which we hope to consult all those concerned, including the unions.
For all these reasons I ask the House to reject the amendment.

10.30 p.m.

Mr. Robert Edwards: This is a stage in the debate where one or two points of fundamental importance might be discussed.
There has been no meaningful consultation between the Government and the trade unions. For 13 years Governments have consulted unions and industries on every piece of social and economic legislation that has come before this House, until this present Government were elected. They have refused persistently to

discuss principles. All that they have been ready to discuss with the trade union movement has been the details after they have decided the principles. It is this that has led to the conflict between the trade unions and the Government, and this fundamentally is the position dividing the two sides of the House.
Both the Secretary of State and the hon. Member for Harrow, East (Mr. Dykes) made great play of the fact that it is impossible to have a policy controlling prices without controlling wages and salaries. But there is a great difference here. There is a sanction against wages and salaries because they have to be negotiated with employers. That is the basic sanction. There cannot be statutory control over such a sensitive area of collective bargaining involving hundreds of collective agreements and industries which are developing on the basis of technological changes, quite apart from considerations of productivity bargaining and piece work rates.
I have been involved for 30 years in industrial negotiations, and I know that the whole movement of collective bargaining has been away from national negotiations to negotiations at factory level. It has been recognised that there are great differences between one factory and another, with constantly changing methods of production. It is impossible to devise a blanket agreement based on law with a complicated system of collective bargaining covering thousands of negotiations factory by factory. The Government have persistently refused to understand the traditional development of collective bargaining, and this is why they see their policy breaking down before their eyes.
The hon. Member for Harrow, East made a general observation about the problems of inflation. We have not yet started to consider them. Last Thursday we debated the effects of the multi-national companies on world-wide inflation. I heard a much-respected Member of this House who is supposed to be very knowledgeable about these matters, the hon. Member for Walsall, South (Sir H. d'Avigdor-Goldsmid) say that the multinational companies had no liquid assets. I know for a fact that the liquid assets of 2,000 multi-national companies are greater than the total budget of the United States of America and greater than the


total reserves of all public banks and institutions of the world. These are self-balancing and, in my opinion, the real causes of inflation in the western world. Unless we control the anti-social effects of the multi-national companies, we shall never solve the problem of inflation.

We shall create industrial upheaval, which is quite unnecessary, and disrupt the whole economy.

Question put, That the amendment be made:—

The House divided: Ayes 210, Noes 288.

Division No. 70.]
AYES
[10.35 p.m.


Abse, Leo
Golding, John
Mulley, Rt. Hn. Frederick


Allaun, Frank (Salford, E.)
Grant, John D. (Islington, E.)
Murray, Ronald King


Archer, Peter (Rowley Regis)
Griffiths, Eddie (Brightside)
Oakea, Gordon


Ashley, Jack
Griffiths, Will (Exchange)
O'Halloran, Michael


Atkinson, Norman
Hamilton, James (Bothwell)
O'Malley, Brian


Barnes, Michael
Hamilton, William (Fife, W.)
Oram, Bert


Barnett, Guy (Greenwich)
Hannan, William (G'gow, Maryhill)
Orbach, Maurice


Barnett, Joel (Heywood and Royton)
Hardy, Peter
Orme, Stanley


Baxter, William
Harrison, Walter (Wakefield)
Owen, Dr. David (Plymouth, Sutton)


Beaney, Alan
Hart, Rt. Hn. Judith
Palmer, Arthur


Benn, Rt. Hn. Anthony Wedgwood
Hattersley, Roy
Parker, John (Dagenham)


Bidwell, Sydney
Heffer, Eric S.
Parry, Robert (Liverpool, Exchange)


Blenkinsop, Arthur
Houghton, Rt. Hn. Douglas
Pavitt, Laurie


Boardman, H. (Leigh)
Howell, Denis (Small Heath)
Peart, Rt. Hn. Fred


Booth, Albert
Huckfield, Leslie
Perry, Ernest G.


Bottomley, Rt. Hn. Arthur
Hughes, Rt. Hn. Cledwyn (Anglesey)
Prentice, Rt. Hn. Reg.


Boyden, James (Bishop Auckland)
Hughes, Robert (Aberdeen, N.)
Prescott, John


Bradley, Tom
Hughes, Roy (Newport)
Probert, Arthur


Broughton, Sir Alfred
Hunter, Adam
Rees, Merlyn (Leeds, S.)


Brown, Hugh D. (G'gow, Provan)
Irvine, Rt. Hn. Sir Arthur (Edge Hill)
Rhodes, Geoffrey


Buchan, Norman
Janner, Greville
Roberts, Albert (Normanton)


Butier, Mrs. Joyce (Wood Green)
Jay, Rt. Hn. Douglas
Roberts, Rt.Hn. Goronwy (Caernarvon)


Cant, R. B.
Jeger, Mrs. Lena
Robertson, John (Paisley)


Carmichael, Neil
Jenkins, Hugh (Putney)
Roderick, Caerwyn E. (Brc'n&amp;R'dnor)


Carter, Ray (Birmlngh'm, Northfield)
Jenkins, Rt. Hn. Roy (Stechford)
Rodgers, William (Stockton-on-Tees)


Carter-Jones, Lewis (Eccles)
John, Brynmor
Roper, John


Castle, Rt. Hn. Barbara
Johnson, James (K'ston-on-Hull, W.)
Rose, Paul B.


Clark, David (Colne Valley)
Johnson, Walter (Derby, S.)
Ross, Rt. Hn. William (Kilmarnock)


Cocks, Michael (Bristol, S.)
Jones, Barry (Flint, E.)
Rowlands, Ted


Cohen, Stanley
Jones, Dan (Burnley)
Sandelson, Neville


Coleman, Donald
Jones, Rt. Hn. Sir Elwyn (W. Ham, S.)
Sheldon, Robert (Ashton-under-Lyne)


Concannon, J. D.
Jones, Gwynoro (Carmarthen)
Shore, Rt. Hn. Peter (Stepney)


Corbet, Mrs. Freda
Jones, T. Alec (Rhondda, W.)
Short, Mrs. Renée (W'hampton, N.E.)


Cox, Thomas (Wandsworth, C.)
Judd, Frank
Silkin, Rt. Hn. John (Deptford)


Crawshaw, Richard
Kaufman, Gerald
Silkin, Hn. S. C. (Dulwich)


Cronin, John
Kelley, Richard
Sillars, James


Crosland, Rt. Hn. Anthony
Kinnock, Neil
Skinner, Dennis


Grossman, Rt. Hn. Richard
Lambie, David
Small, William


Cunningham, G. (Islington, S.W.)
Lamborn, Harry
Smith, John (Lanarkshire, N.)


Davidson, Arthur
Lawson, George
Spearing, Nigel


Davies, Denzil (Llanelly)
Lee, Rt. Hn. Frederick
Spriggs, Leslie


Davies, Ifor (Gower)
Lestor, Miss Joan
Stallard, A. W.


Davis, Clinton (Hackney, C.)
Lewis, Arthur (W. Ham, N.)
Stewart, Rt. Hn. Michael (Fulham)


Davis, Terry (Bromsgrove)
Lewis, Ron (Carlisle)
Stoddart, David (Swindon)


Deakins, Eric
Lipton, Marcus
Stonehouse, Rt. Hn. John


de Freitas, Rt. Hn. Sir Geoffrey
Lomas, Kenneth
Strauss, Rt. Hn. G. R.


Delargy, Hugh
Lyon, Alexander W. (York)
Summerskill, Hn. Dr. Shirley


Dell, Rt. Hn. Edmund
Lyons, Edward (Bradford, E.)
Swain, Thomas


Dempsey, James
Mabon, Dr. J. Dickson
Thomas, Rt. Hn. George (Cardiff, W.)


Douglas, Dick (Stirlingshire, E.)
McBride, Neil
Thomas, Jeffrey (Abertillery)



McCartney, Hugh
Torney, Tom


Douglas-Mann, Bruce
McGuire, Michael
Tuck, Raphael


Duffy, A. E. P.
Mackie, John
Varley, Eric G


Eadie, Alex
McNamara, J. Kevin
Wainwright, Edwin


Edelman, Maurice
Mahon, Simon (Bootle)
Walden, Brian (B'm'ham, All Saints)


Edwards, Robert (Bilston)
Mallalieu, J. P. W. (Huddersfield, E.)
Walker, Harold (Doncaster)


Edwards, William (Merioneth)
Marks, Kenneth
Wallace, George


Ellis, Tom
Marquand, David
Weitzman, David


English, Michael
Marshall, Dr. Edmund
Wellbeloved, James


Evans, Fred
Mason, Rt. Hn. Roy
Wells, William (Walsall, N.)


Faulds, Andrew
Mayhew, Christopher
Whitehead, Phillip


Fisher, Mrs. Doris (B'ham, Ladywood)
Meacher, Michael
Whitlock, William


Fitch, Alan (Wigan)
Mendelson, John
Williams, Alan (Swansea, W.)


Fletcher, Raymond (Ilkeston)
Mikardo, Ian
Williams, Mrs. Shirley (Hitchin)


Fletcher, Ted (Darlington)
Millan, Bruce
Williams, W. T. (Warrington)


Ford, Ben
Miller, Dr. M. S.
Wilson, Alexander (Hamilton)


Forrester, John
Mitchell, R. C. (S'hampton, Itchen)
Wilson, William (Coventry, S.)


Fraser, John (Norwood)
Molloy, William



Freeson, Reginald
Morgan, Elystan (Cardiganshire)
TELLERS FOR THE AYES:


Galpern, Sir Myer
Morris, Alfred (Wythenshawe)
Mr. James A. Dunn and


Gilbert, Dr. John
Morris, Charles R. (Openshaw)
Mr. Tom Pendry


Ginsburg, Dav'd (Dewsbury)
Morris, Rt. Hn. John (Aberavon)





NOES


Adley, Robert
Fraser, Rt. Hn. Hugh (St'fford &amp; Stone)
McNair-Wilson, Michael


Alison, Michael (Barkston Ash)
Fry, Peter
McNair-Wilson, Patrick (New Forest)


Allason, James (Hemel Hempstead)
Galbraith, Hn. T. G. D.
Maddan, Martin


Amery, Rt. Hn. Julian
Gardner, Edward
Madel, David


Archer, Jeffrey (Louth)
Gibson-Watt, David
Maginnis, John E.


Astor, John
Gilmour, Ian (Norfolk, C.)
Marples, Rt. Hn. Ernest


Atkins, Humphrey
Gilmour, Sir John (Fife, E.)
Marten, Neil


Awdry, Daniel
Glyn, Dr. Alan
Mather, Carol


Baker, Kenneth (St. Marylebone)
Godber, Rt. Hn. J. B.
Maude, Angus


Baker, W. H. K. (Banff)
Goodhart, Phillp
Mawby, Ray


Balniel, Rt. Hn. Lord
Goodhew, Victor
Maxwell-Hyslop, R. J.


Batsford, Brian
Gower, Raymond
Mills, Peter (Torrington)


Beamish, Col. Sir Tufton
Grant, Anthony (Harrow, C.)
Miscampbell, Norman


Bell, Ronald
Gray, Hamish
Mitchell, Lt.-Col. C. (Aberdeenshire, W)


Bennett, Sir Frederic (Torquay)
Green, Alan
Mitchell, David (Basingstoke)


Bennett, Dr. Reginald (Gosport)
Grieve, Percy
Moate, Roger


Benyon, W.
Griffiths, Eldon (Bury St. Edmunds)
Molyneaux, James




Money Ernle


Berry, Hn. Anthony
Grylls, Michael
Monks, Mrs. Connie


Biffen, John
Gummer, J. Selwyn
Montgomery, Fergus


Biggs-Davison, John
Gurden, Harold
More, Jasper


Blaker, Peter
Hall, Miss Joan (Kelghley)
Morgan-Giles, Rear-Adm.


Boardman, Tom (Leicester, S.W.)
Hall, John (Wycombe)
Morrison, Charles


Boscawen, Hn. Robert
Hall-Davis, A. G. F.
Mudd, David


Bossom, Sir Clive
Hamilton, Michael (Salisbury)
Murton, Oscar


Bowden, Andrew
Hannam, John (Exeter)
Nabarro, Sir Gerald


Braine, Sir Bernard
Harrison, Brian (Maldon)
Neave, Airey


Bray, Ronald
Harrison, Col. Sir Harwood (Eye)
Nicholls, Sir Harmar


Brewis, John
Haselhurst, Alan
Noble, Rt. Hn. Michael


Brinton, Sir Tatton
Hastings, Stephen
Normanton, Tom


Brocklebank-Fowler, Christopher
Havers, Sir Michael
Nott, John


Brown, Sir Edward (Bath)
Hawkins, Paul
Onslow, Cranley


Bruce-Gardyne, J.
Hayhoe, Barney
Oppenheim, Mrs. Sally


Bryan, Sir Paul
Heath, Rt. Hn. Edward
Orr, Capt. L. P. S.


Buchanan-Smith, Alick (Angus, N&amp;M)
Heseltine, Michael
Osborn, John


Buck, Antony
Hicks, Robert
Owen, Idris (Stockport, N.)


Bullus, Sir Eric
Higgins, Terence L.
Page, Rt. Hn. Graham (Crosby)


Burden, F. A.
Hiley, Joseph
Pardoe, John


Campbell, Rt. Hn. G. (Moray &amp; Nairn)
Hill, John E. B. (Norfolk, S.)
Parkinson, Cecil


Carlisle, Mark
Hill, James (Southampton, Test)
Peel, Sir John


Carr, Rt. Hn. Robert
Holland, Phillp
Percival, Ian


Channon, Paul
Holt, Miss Mary
Peyton, Rt. Hn. John


Chapman, Sydney
Hordern, Peter
Pink, R. Bonner


Chichester-Clark, R.
Hornby, Richard
Pounder, Rafton


Churchill, W. S.
Hornsby-Smith, Rt. Hn. Dame Patricia
Price, David (Eastleigh)


Clark, William (Surrey, E.)
Howe, Rt. Hn. Sir Geoffrey
Prior, Rt. Hn. J. M. L.


Clarke, Kenneth (Rushcliffe)
Hunt, John
Proudfoot, Wilfred


Cockeram, Eric
Hutchison, Michael Clark
Pym, Rt. Hn. Francis


Cooke, Robert
Iremonger, T. L.
Raison, Timothy


Coombs, Derek
Irvine, Bryant Godman (Rye)
Ramsden, Rt. Hn. James


Corfield, Rt. Hn. Sir Frederick
James, David
Rawlinson, Rt. Hn. Sir Peter


Cormack, Patrick
Jenkin, Patrick (Woodford)
Redmond, Robert


Costain, A. P.
Jessel, Toby
Reed, Laurance (Bolton, E.)


Critchley, Julian
Johnson Smith, G. (E. Grinstead)
Rees, Peter (Dover)


Crouch, David
Jones, Arthur (Northants, S.)
Rees-Davies, W. R.


Crowder, F. P.
Jopling, Michael
Renton, Rt. Hn. Sir David


Davies, Rt. Hn. John (Knutsford)
Joseph, Rt. Hn. Sir Keith
Rhys Williams, Sir Brandon


d'Avigdor-Goldsmid, Maj.-Gen. Jack
Kellett-Bowman, Mrs. Elaine
Ridley, Hn. Nicholas


Dean, Paul
Kilfedder, James
Ridsdale, Julian


Deedes, Rt. Hn. W. F.
Kimball, Marcus
Rippon, Rt. Hn. Geoffrey


Digby, Simon Wingfield
King, Tom (Bridgwater)
Roberts, Michael (Cardiff, N.)


Dixon, Piers
Kinsey, J. R.
Roberts, Wyn (Conway)


Dodds-Parker, Sir Douglas
Klrk, Peter
Rodgers, Sir John (Sevenoaks)


Drayson, G. B.
Kltson, Timothy
Rossi, Hugh (Hornsey)


du Cann, Rt. Hn. Edward
Knight, Mrs. Jill
Rost, Peter


Dykes, Hugh
Knox, David
Russell, Sir Ronald


Eden, Rt. Hn. Sir John
Lambton, Lord
St. John-Stevas, Norman


Edwards, Nicholas (Pembroke)
Lamont, Norman
Scott, Nicholas


Elliot, Capt. Walter (Carshalton)
Lane, David
Scott-Hopkins, James


Elliott, R. W. (N'c'tle-upon-Tyne, N.)
Langford-Holt, Sir John
Shaw, Michael (Sc'b'gh &amp; Whitby)


Emery, Peter
Le Marchant, Spencer
Shelton, William (Clapham)


Eyre, Reginald
Lewis, Kenneth (Rutland)
Simeons, Charles


Farr, John
Lloyd, Ian (P'tsm'th, Langstone)
Sinclair, Sir George


Fell, Anthony
Longden, Sir Gllbert
Skeet, T. H. H.


Fenner, Mrs. Peggy
Loveridge, John
Soref, Harold


Fldler, Michael
Luce, R. N.
Speed, Keith


Flnsberg, Geoffrey (Hampstead)
McAdden, Sir Stephen
Spence, John


Fisher, Nigel (Surbiton)
MacArthur, Ian
Sproat, Iain


Fletcher-Cooke, Charles
McCrindle, R. A.
Stainton, Keith


Fookes, Miss Janet
McLaren, Martin
Stanbrook, Ivor


Fortescue, Tim
Maclean, Sir Fitzroy
Steel, David


Foster, Sir John
McMaster, Stanley
Stewart-Smith, Geoffrey (Belper)


Fowler, Norman
Macmillan, Rt. Hn. Maurice (Farnham)
Stodart, Anthony (Edinburgh W.)







Stoddart-Scott, Col. Sir M
Trew, Peter
Wells, John (Maidstone)


Stokes, John
Tugendhat, Christopher
White, Roger (Gravesend)


Stuttatord, Dr. Tom
Turton, Rt. Hn. Sir Robin
Wiggin, Jerry


Sutcliffe, John
van Straubenzee, W. R.
Wilkinson, John


Tapsell, Peter
Vaughan, Dr. Gerard
Winterton, Nicholas


Taylor, Sir Charles (Eastbourne)
Vickers, Dame Joan
Wolrige-Gordon, Patrick


Taylor, Frank (Moss Side)
Waddington, David
Wood, Rt. Hn. Richard


Taylor, Robert (Croydon, N.W.)
Walder, David (Clitheroe)
Woodnutt, Mark


Tebbit, Norman
Walker, Rt. Hn. Peter (Worcester)
Worsley, Marcus


Thatcher, Rt. Hn. Mrs. Margaret
Walker-Smith, Rt. Hn. Sir Derek
Wylie, Rt. Hn. N. R.


Thomas, Rt. Hn. Peter (Hendon, S.)
Wall, Patrick
Younger, Hn. George


Thompson, Sir Richard (Croydon, S.)
Walters, Dennis



Tilney, John
Ward, Dame Irene
TELLERS FOR THE NOES:


Tope, Graham
Warren, Kenneth
Mr. Walter Clegg and


Trafford, Or. Anthony
Weatherill, Bernard
Mr. Marcus Fox.


Question accordingly negatived.

Clause 2

CODE FOR THE GUIDANCE OF AGENCIES

10.45 p.m.

Mr. Arthur Palmer: I beg to move Amendment No. 26, in page 2, line 29, at end insert:
'and also an obligation to take into account, where appropriate, the special knowledge, skill and responsibilities of groups of employees'.

Mr. Speaker: I understand that with this Amendment it will be convenient also to discuss Amendment No. 25, in page 2, line 29, at end insert:
'(3) The code shall not allow the real value in terms of purchasing power of any wage or salary to be diminished in comparison with the same real value at the time of the last pay settlement affecting such wage or salary'.

Mr. Palmer: The amendments have some special relevance to the situation in the electricity supply industry.
This is the first time that I have spoken in the course of this legislation, but I can claim to be something of a pioneer as a doubter of the value of incomes policies. In the middle 1960s when I was President of the National Federation of Professional Workers I was an outspoken critic I think of the incomes policy of my right hon. Friends who then formed the Government. I do not believe that such policies can work in a free society. They have certainly not worked anywhere in the Western world so far. If there were a change in the whole nature of society, in the whole balance of property relations, they could possibly work. But I am very doubtful whether the policy now before us will work in the long run in any real sense in precisely the same way that I was doubtful—and was proved right by events—whether the Labour Government's policy would work.
I have a special worry about the Government. In this matter they are reformed drunkards. They have taken to water with all the enthusiasm that at one time they reserved for their gin. They came into office believing that a free-for-all in the economy would solve all their problems and now they seem to think that rules, regulations and formulae will decide everything. It can at least be said in defence of my hon. Friends that they believed in the water

in the first place. The Conservatives moved from gin to water, and that, I am told, if done suddenly, can have disastrous results.
My amendments, therefore, will test whether the Government are prepared to take a more moderate course, to take sherry, for instance. The amendments do that by raising two issues. One is differentials and the other is avoiding reductions in standards of some employees.
Anyone with any practical experience of negotiations in industry, particularly, perhaps, for salaried staffs, where one is often negotiating not for a great number of people at the same level but for members of a group working in industry organised in a pyramid or hierarchy, knows that the differentials are the very essence of negotiations. Probably the great majority of claims, settled peacefully or otherwise, that come before negotiating bodies, arbitration tribunals, and so on, are about differentials.
Differentials may be of various kinds. They may be within an industry, between one group of employees and another. They may be within a group of employees, between one employee and another. The other important class of differential is that between one industry and another. In the nature of things, understanding differentials is essential to the whole business of understanding pay negotiations.
My experience in the electricity supply industry, as I think the House knows, is in connection with the fortunes of the salaried technical staff. In the course of our negotiations in looking after the practical interests of some 28,000 technical staff in electricity supply, if we are to be realistic, we are faced with the question of what, for instance, is a charge engineer in a power station worth as against an electrical maintenance engineer or a mechanical maintenance engineer. Such issues are fundamental and take up a vast part of the time of the negotiating bodies, and much attention is paid to evidence.
If the electricity supply industry is now expected to fit its complicated system of staff differentials, which are always changing as techniques change, into the formula of £1 a week plus 4 per cent. of the pay bill over the previous year, whoever


attempts to do it will need to be a wizard. It can scarcely be done in any satisfactory fashion, if done at all, by any body of human beings.
What is and will be the grievance in my industry, as it will be in comparable industries, is that this means that the whole carefully built up system of pay comparisons within the industry, between one employee and another—the technical staff in this case—is simply to go by the board. It means that many years' work is to be lost, because it will not be easy to recover from the distortions which the Government's mistaken policies will bring about.
It is important also to look at pay comparisons in relation to responsibility, training and skill between one section of employees and another. The differential with which technical staff in electricity supply are at present concerned is that in relation to industrial staff. This matter is being pursued in no spirit of jealousy, but if there is to be a proper chain of command and a system of responsibility differentials must apply. There must, for example, be a differential between supervisory and non-supervisory staff, just as there must be an adequate differential between skilled and unskilled workers.
It so happens that industrial staff in the electricity supply industry—and I congratulate their negotiators on their ability—managed to get in their improvement before the standstill. But the technical staff were caught by the freeze and this has caused considerable bitterness. Does the right hon. Gentleman feel that the case for restoring differentials should be defeated by this official and arbitrary policy? No doubt the hon. Member for Cornwall, North (Mr. Pardoe) feels that it should be defeated, but I certainly see no justice in such an action. Furthermore, I do not think that the policy will work in any case.
Another aspect of this policy which will affect the electricity supply industry relates to the flow of staff from that industry to other industries and vice versa. If the Government interfere with the pay structure and differentials which apply to the nationalised electricity supply industry—and the industry had to wait for a Conservative Government to find itself pushed into the financial red—it will mean that the industry will find itself

being treated even more shabbily in future than already by the present Administration.
The general secretary of my union, the Electrical Power Engineers, recently supplied me with some figures which are relevant to this debate. They prove that as a result of this policy the technical staff in electricity supply will suffer a lowering of standards in the next year. The figures show that between December 1971 and December 1972 the price index rose by 7·7 per cent., weekly wages rose by 13·8 per cent., and average earnings in industry increased by 16·5 per cent. From those figures the Prime Minister in a recent speech—I cannot remember the exact date of it—concluded that the increase over the last year in real wages has been 6 per cent. I must point out that the average take-home pay of members of my union—men who carry out a difficult and responsible job and who require considerable experience and qualification to do the job—is £2,500 per year. It is a larger income than that of many of my constituents, but it is nothing compared with incomes that are often taken for granted on the Government benches opposite.
11.0 p.m.
On the phase 2 formula of an extra £1 a week plus 4 per cent. of the total wages bill for a group of employees, the technical staff in electricity supply will have an increase of 5·8 per cent. The loss of the real purchasing value of their incomes, on the Government's own figures, will be 0·4 per cent. I cannot believe that that is just. The Government's only defence is, "We have so blundered over inflation that we can put it right only by the crude application of policies that we admit to be unjust to certain sections." That is no defence. If the Government are in doubt about where they stand, they should test it by putting to the people in a General Election the injustices that arise from their mismanagement.
I make no apology for concentrating on my own industry, because we can get to grips with these issues tonight only by the use of specific examples. In the Sunday Express on 28th January there appeared an article by the hon. Member for Stratford-on-Avon (Mr. Maude), who is quite a frequent contributor and brightens my Sundays sometimes. I have


given him notice that I intended to mention the article, which was headed melodramatically:
God Help Us if the Militants Wreck the Freeze".
In it he wrote:
what happens if the electricity workers themselves come out on strike? I do not think they will do so as a whole but the militants just might manage to persuade enough workers to quit to make it impossible for the senior staff"—
I think that the hon. Gentleman means the technical staff—
to keep the power stations going.
What happens then?
Frankly, I don't know—but I hope to God someones does. We have been told in the past that troops cannot run power stations. I have never been sure that this was true, given the presence of senior technical staff, but supposing it is? Could the Government raise enough volunteers with the necessary skills to keep electricity supplies going? It would certainly have to try despite the risk of industrial action spreading.
The assumption in that article is that the technical staff will do the Government's dirty work and keep the power stations going. The technical staff are not bad trade unionists and would not act in that way in any case. But apart from that, when injustices of the present kind are being perpetrated by a Government on a section of loyal employees, who normally feel a great obligation to our public electricity supply and its consumers, if they were not militant before, those employees will certainly be militant in the future.
In fact the whole of this policy is a perfect formula for turning moderates into militants. It is for this reason that I am glad to move this amendment which, with the associated amendment on the Order Paper may look—I shall not say innocent, but procedural. That is not the case. They were put down deliberately to illuminate points fundamental to the understanding of the unjust nature of this legislation to many.

Mr. Bruce-Gardyne: I was interested by the peroration of the hon. Member for Bristol, Central (Mr. Palmer) when he said—and I apologise if do not quote precisely—that nothing could be more certain to turn moderates into militants than a policy of this kind. That rang a bell in my mind. I seem to remember hearing that said on occasion in years gone by,

I think, perhaps, the Home Secretary, and I used to think there was a lot in it. I confess that I have not entirely lost my belief in the strength of that argument today, but no doubt the Secretary of State will be able to reassure us on that.
The hon. Member has two related amendments, and for reasons I shall come to I cannot support him in the second but I have a great deal of sympathy with him in the first, which deals with the vexed problem of differentials. We have been told on numerous occasions that one of the great purposes of phase 2 is to help the lower-paid workers. A consequence of helping them is the erosion of differentials. I do not think there is any argument about that. I know that many observers seem to find it intolerable that there should be lower-paid workers, or indeed that there should be quite a number of people who earn less than the average wage. I gave up mathematics quite a long time ago and I may not be up to date, but I never understood how one arrives at a position where everybody earns the average wage or above. Many will be at the average and above—and on that basis there is a slight mathematical conundrum.
We are assured that the purpose of phase 2 is to assist the lower paid, and that must lead to erosion of differentials. There were some wise words in the Economist—

Mr. Brian Walden: A change.

Mr. Bruce-Gardyne: The hon. Member says it is a change but that was several months ago. In those days the Economist said that the way to help the lower paid was to halt inflation. That is true. I do not think the way is to try to devise a wonderful structure which in some unexplained way will compensate the lower paid artificially, because the reasons they are the lower paid have to do with the structure of the industry in which they work and with their effective bargaining power. The most likely consequences of an attempt to differentiate in favour of the lower paid is to deprive the lower paid of employment because the firms in which they are the lower paid are probably firms which, if they are forced to move nearer the national average at any given time, would have to reduce their labour force drastically, in order to do so.
However, there is the other side of the argument which the amendment is designed to deal with, and that is the problem of the erosion of differentials. I read the other day of a settlement reached between the teaching profession in Scotland and its employers to take effect in phase 2. I imagine that the settlement had the blessing of my right hon. Friends. I may be wrong about that, but if it did not have their blessing, one would be expected to hear something about it. One would have expected the Government to announce that they would slap an order on all the local authorities in Scotland, or whatever it is they do under the Bill.
As I understand it, the effect of the settlement is that whereas for the lower-paid teachers—whom one presumes are those with the least qualifications and those in respect of whom supply is certainly adequate to meet demand, for instance, young unmarried women teachers who will not be in the profession for long—the increase in salary will be about 20 per cent., at the other end of the scale senior teachers, head teachers, and so on, will get 3 per cent. or less.
I do not think that it requires very much calculation to see that, inevitably, in some schools in Scotland as a result of this settlement the position will be arrived at that head teachers or heads of departments will earn nothing at all—certainly nothing in terms of what hon. Gentlemen opposite like to refer to as take-home pay—above the earnings of their assistants.
I remember in days gone by, in long years past, in a different existence in 1966, how we used to point out to right hon. and hon. Gentlemen opposite the folly of trying to recruit, for instance, the chairman of a nationalised industry on a salary which, first, would guarantee that we could not get the right man for that job and, secondly, would disrupt the whole salary structure within the nationalised industry to which that top limit was applied.
I think that this problem arises, and will arise very widely, under what we are proposing in the Bill. I hope that my right hon. Friend the Secretary of State for Employment will be able to explain to the House the considerations

which satisfy the Government that this problem will not arise under this legislation whereas we used to say how dangerous such problems were under the legislation introduced by the Labour Party. I think that perhaps we need a word of explanation about this.
I turn briefly to the second amendment, which I could not support, for a simple reason. I was a member of the Sub-Committee of the Public Expenditure Committee which published a report the other day pointing out that at the present rate of progress of public expenditure it was not only most unlikely that there would be scope for a growth of consumer spending on the scale that we have experienced in the last year or more but that it was very unlikely that there would be scope for any significant growth in consumer expenditure over the next 18 months.
I think that, broadly speaking, that is probably true, and if it is true there will have to be cases in which the real value in terms of purchasing power of a wage or salary may have to be diminished compared with the same real value at the time of the last pay settlement.

Mr. Palmer: If the hon. Gentleman believes that and his Government believe it, is not the right policy one of increasing taxation, not reducing it?

11.15 p.m.

Mr. Bruce-Gardyne: As the hon. Gentleman realises, that hardly arises on this amendment. There were implications to be drawn from that report of the Public Expenditure Committee about taxation which the hon. Gentleman will no doubt have drawn. All I am saying is that if the conclusions drawn by the Committee were correct, it seems to follow as a probability that in some cases at any rate the situation which the hon. Gentleman's Second amendment is designed to avert is one we would have to expect to encounter.

Mr. Palmer: What it amounts to under this policy is that some sections of the community will be arbitrarily taxed. Taxation should apply to all.

Mr. Bruce-Gardyne: If there is little scope for growth in consumer expenditure in the next 18 months to two years, one would expect that the real value of the pay of certain groups could be expected


to decline between settlements. I remind hon. Gentlemen opposite that under the legislation which their Government introduced this was not an exceptional circumstance. This was the whole purpose of the policy as defined by the right hon. Member for Birmingham, Stechford (Mr. Roy Jenkins). It was to reduce real incomes. This was part of the purpose of the policy.

Mr. Harold Walker: For two years I was as intimately involved in the administration of that policy as perhaps any member of the Government, certainly any Member present tonight. I can assure him that no matter what his recollection is, this was never part of the philosophy of those responsible for applying that policy.

Mr. Bruce-Gardyne: I will certainly check the precise words of the right hon. Gentleman. My recollection was that he made it clear that part of his aim was to secure some curtailment of earnings as part of the correction policy needed to deal with the balance of payments situation following devaluation. I would not support the second amendment because circumstances may materialise where such consequences as the amendment is designed to avert would be unavoidable.
The first amendment raises a point of considerable substance to which the House needs an answer—the consequence of the erosion of the differential. The hon. Gentleman referred to one industry of which he has particular knowledge, but, as he emphasised, there are many examples. We on this side expressed real and understandable concern on this point when previous legislation was going through the House, and we need to know what circumstances have changed to make these anxieties unnecessary today.

Mr. Pardoe: I am interested in the amendments and even more in the speech of the hon. Member for Bristol, Central (Mr. Palmer) because he has enormous knowledge of the electricity industry. It was interesting to hear him defend differentials in an industry where differentials have been enshrined for so long. The amendment is in defence of differentials. As we have heard, this is the conventional wisdom shared on all sides.
I challenge the whole basis. How did differentials arise? If there were a pur-

pose for them as we have them today, codified and solidified into an historical mould, that reason no longer exists. I doubt whether even the differentials in the electricity industry can be justified in economic terms, although they might be justifiable in social terms. To find out how differentials came about one would have to go back to Adam Smith, the pin factory and the division of labour. An individual wanted to specialise and to increase the value of his output. Through self-interest he became skilled and increased the value of his output and therefore his income. There is nothing wrong with enlightened self-interest, but that was individual action to advance self-interest.
There might still be justification for differentials based on the value of an individual's output, but in the electricity industry today one could hardly justify differentials by reference to the value of the output of individuals.

Mr. Palmer: There is a considerable differential between the hon. Gentleman's income and that of most of his constituents.

Mr. Pardoe: I am coming to that. Do we need differentials to obtain skilled people? Do we have to pay graduates more for having received a privileged education? I do not see why we should send the privileged few—mostly from the middle class—to university out of money taken in taxes out of the pockets of the poor—who pay a higher proportion of their income in tax—and then say that those who have been to university should be paid more because they have had a privileged education. I have never thought that a privileged education entitled one to a higher income. In a just society precisely the opposite would apply.
We are continually told that to get people to take responsibility we have to pay them a higher salary. But there are people who enjoy responsibility. There are people who went for a commission when they were doing their national service—not for the pay. When I was asked why I had gone for a commission I said, "National service is Hell, and I want to do Hell first-class." It was more comfortable than slogging it on the barrack square. That is one reason why people go for differentials, but I do not see why


we have to back up differentials in a pay policy.

Mr. Ronald Bell: Are not we hearing the official policy of the Liberal Party?

Mr. Pardoe: All in good time. We rarely hear the official policy of the Conservative Party from the hon. and learned Gentleman.
Why do we pay judges such an enormous income? I suppose that arose because we had to stop them being corrupt. Why do we pay the Chairman of the Pay Board vastly more than we pay a clerk in the Pay Board or a Member of Parliament? The job of chairman I imagine to be fascinating and there are many people who would like to do it without being paid £20,000. I imagine there are people who would be prepared to be Chairman of the British Railways Board without geing paid £20,000. It is argued that one needs to preserve differentials in order to have efficiency in industry. It is an argument that, holding an egalitarian philosophy, I cannot support because it is élitist.

Mr. Brian Walden: It is late at night and I want to be certain that I understand what the hon. Gentleman seems to be proposing on behalf of the Liberal Party. Apparently, it is the idea that the cleaning woman at the court should be paid more than the judge because she does not enjoy her job and he does, or that the people in the cafeteria of the House of Commons should be paid more than Members of Parliament because we enjoy our jobs and they do not. It is not that I necessarily disagree with the hon. Gentleman, but I want it on record that this is the view of the post-capitalist Liberal Party.

Mr. Pardoe: The hon. Gentleman is getting near to what the view would be.

Mr. Walden: I thought so.

Mr. Pardoe: I think the Liberal view would be a wish to narrow the gap at this stage, although not immediately to close it. I can imagine a situation in which, because cleaning floors and swabbing out lavatories or working in the mines—a ghastly job—or clearing dustbins were such nasty jobs, those who

do them would, in a just society, be paid more than they would for doing nice, comfortable jobs in decent, carpeted surroundings. This is something we shall inevitably have to move towards. It is one of the reasons why the miners, for example, have been able to get fairly large increases vis-à-vis civil servants.

Mr. Walden: Then what in the name of Heaven is the hon. Gentleman doing in a party called the "Liberal Party"? May I introduce him to an idea called "Marxism"?

Mr. Pardoe: The hon. Gentleman is an apostle of one revolutionary philosophy but it is not the only revolutionary philosophy. I happen to base my political philosophy on the greatest revolution known to man, which was not that little affair in 1917 but the revolution of 1789. The second banner of that revolution was equality, and I believe that Liberalism is about liberty, equality and fraternity in equal proportions. I am an unashamed egalitarian, and I am not in the least surprised to find an unholy alliance between these mock 20th century Socialists and the party of the élite in believing that differentials have in some way to be preserved for ever and anon. These are the people who now defend the elitist concept of society. The hon. Member for Birmingham, All Saints, is an absolute product of meritocracy.

Mr. Walden: I cannot say the same of the hon. Gentleman.

Mr. Pardoe: No, but I am not desirous of being so.

Mr. Walden: That is obvious.

Mr. Pardoe: That is the difference between us. The argument of the hon. Member for Bristol, Central is not very different from that which has been put by hon. Members opposite. They argue that it is necessary to lower the rates of taxation on very high incomes because high rates of super tax are destroying incentive. I have never believed that argument. It is absolute nonsense. When hon. Members opposite tell us, with tears running down their faces, of some friend who earns £20,000 a year and keeps only 6d. in the £, one can only say that if that is a disincentive he is "bonkers" to be working in the job if he does not


like it, for otherwise he is doing it because he likes it, irrespective of money. I suspect that there are many people who would willingly come forward to do these jobs without financial reward.
If the hon. Member argues that his free collective bargaining and his precious differentials are needed for the lower paid, all I can say is that they seem to have done nothing for the lower paid. With free collective bargaining and differentials, we have been unable to solve the problems of the lower paid, and I do not believe that it will be possible to solve their problems—including, for instance, the badly paid women in industry—unless we close the gap, which means abandoning these precious differentials.

Mr. Palmer: How does the hon. Gentleman suppose that in any kind of sane world he can get the kind of equality of incomes he is talking about without a complete change in property relations? That is the only possible basis on which it could be founded.

11.30 p.m.

Mr. Pardoe: That is right. There would have to be a complete change in property relationships. Part of Liberal policy is to distribute wealth. We are a distributionist party. One of the tragedies of six years of Labour government was that the Labour Party failed totally to redistribute wealth.

Mr. Palmer: Property.

Mr. Pardoe: Yes, property and wealth. Property is wealth. Property is an instrument of personality; we have to distribute it. I entirely agree with the hon. Gentleman.
However, I do not agree with the hon. Gentleman that we need to preserve his precious industrial differentials, which have done nothing to solve the problems of the lower paid and which are based on nothing economic. They are historical and they should be abolished. Certain new differentials may have to be built into our pay system if incentives are required in the short term. In an ideal society, they would not be required. However, the differentials about which the hon. Gentleman speaks have come about as a result of history and bear no relationship to what we need in society today.

Mr. Atkinson: I have a vested interest. I have not been a president of the Oxford Union and therefore I cannot join in the fun which has taken place between the two sides of the House. There seems to be a similarity of thinking between hon. Members opposite and one or two of my hon. Friends. My views are much nearer to those of another hon. Member who does not share my political philosophy. However, his views seem to be getting nearer to the policies which I hope the Labour Party will one day pursue.
If this argument is about the creation of a fair society out of an unfair society, surely the narrowing of differentials must be part of that philosophy. It must be part of the political apparatus which we are attempting to set up.

Mr. Brian Walden: My hon. Friend knows better than that. The clue is the question of property relationships. None of the differentials could be narrowed permanently without a transformation of property relationships. My hon. Friend has nothing in common with the hon. Member for Cornwall, North (Mr. Pardoe). What he says is claptrap. My hon. Friend is a Marxist. That makes some sort of sense.

Mr. Atkinson: I am grateful to my hon. Friend. That was part of the argument which I was about to use. We are talking about property relationships. and therefore this discussion is about ownership. The basis of Labour Party politics is ownership of property. This is where the transference of wealth takes place. That is what the argument is about. I did not want to personalise it, but, in view of some of the comments made tonight, perhaps we should do so. If we say that one-sixth of the Liberal Party is involved with Royalty, we get the matter in perspective.

Mr. Pardoe: One-eighth. It is one-ninth on Fridays.

Mr. Atkinson: Let me deal with the arguments advanced by an hon. and learned Member who is a judge. He advocated earlier that Members of Parliament should accept a voluntary cut in their salaries as a method of giving leadership to the nation. [HON. MEMBERS: "Who said that?"] I do not know his constituency. I understand


that he is known as "the Nabarro lawyer". He was involved in a recent famous case in which he gained some fame—and no doubt a sizeable brief. His earnings are about £25,000 a year outside this place. I understand that he is Recorder of Colchester. Taking that with the brief fees which he receives, I imagine that his earnings are about £25,000. When talking about differentials, he said that railwaymen were not as valuable to society as judges and lawyers. He went on to suggest that if there were one way in which the railwayman could help his economic problem it was by practising at the Bar. He said that there was no reason why this should not happen. I do not know whether that is a serious argument—that one can change a job in this way to solve the problem.
The point is that there is an industrial dispute involving the railwaymen, with a consequent disruption of the economy. A serious situation has arisen as a result of these men withdrawing their labour. If all the judges withdrew their labour tomorrow I doubt whether many people would be inconvenienced. Some people would no doubt welcome the situation so created. That would also apply to barristers. I should think that we could solve many problems if we got rid of most of the barristers practising today, particularly those in the income bracket which the hon. and learned Member claimed to be in earlier, when he was putting himself alongside railwaymen in a serious argument about differentials.
There is an argument that railwaymen are worth more than judges anyway, on that basis.

Mr. Pardoe: And probation officers.

Mr. Atkinson: And probation officers. A probation officer would be worth more than the man doling out the sentence. I know that the hon. Member for Cornwall, North was not serious when he was talking about the person cleaning the court as against the judges. But, recognising the argument about property, we are trying to narrow differentials.

Mr. Brian Walden: Even at this hour, let us get this right. Within our present form of society, what a man is paid is what the market will pay him. That is

known to all hon. Members. Of course, if we destroy the market and change the property values, those scales die, but until we do that they exist, and no legislation of this House can prevent their existing.

Mr. Atkinson: I accept what my hon. Friend says. I do not challenge the basis of his argument. What he says is absolutely true, but in real life we are now faced with paying, wage increases in terms of percentages and flat rates right across the board. I share the view of the TUC that if we are to help those at the lower end of the scale we should stop talking about percentages and talk in terms of cash. If there is an immediate policy to be pursued in this situation it is the policy suggested by the TUC—a £3 flat rate—which was discussed at the Downing Street talks and elsewhere—as against the Government's £1. The TUC was talking in terms of a £3 or £2 increase right across the board, which would have the effect of reducing the existing differentials.
Those are courageous arguments to put forward by men in the trade union movement, representing skilled workers and others who enjoy the benefit of the high differentials that exist in industry. The trade union leaders talk about flat rates of that kind, perhaps topped up by a fixed percentage, not unlike the present formula, although the Government's formula of £1 plus 4 per cent. is so unrealistic that it is out of this world. But there is an argument in favour of this sort of adjustment in the present situation, which is a critical one. I should have thought that one of our objects should be to reduce the differentials in society and take away the rough edges of unfairness which exist, and which we all recognise to exist.
That brings me to the two amendments, both of which I support, with the qualification that I want to see a shrinking of the very wide differentials existing at the moment.
For a wage earner in industry to maintain his standard of living, he must be paid about 4 per cent. in addition to the rise in the price index. In terms of take-home pay, anyone making average earnings in industry must be receiving 4 per cent. more than the rise in the price index to break even at the end of the day.


This is the real cause of much of the dissatisfaction in the present discussions. Taking into account all the peripheral aspects of the argument about the 4 per cent. on top of the price index, possibly the result is a higher figure, but certainly that is the minimum. That is the case spelt out in the second amendment, and for that reason I support it.
A very real point which many of my right hon. and hon. Friends argue is that there should be a lessening in present differentials if we are as soon as possible to move to a less unequal society. My experience in life is that the most wealthy make the least contribution to the wellbeing of the world. They make the least contribution to progress in any form in this or in any other country. The really great men whom I have had the privilege to know in my life have received the least money. There is obviously something wrong with a society which has its values upside down. Most of us understand why it has happened, but now it is revealed for all to see.
I have had the privilege to know some of the world's finest engineers, and we should be proud of them. But I am amazed to see in our newspapers, especially at weekends, advertisements for civil, mechanical and nuclear engineers, and the salaries quoted are absolute pittances compared with those of the accountants, the financial lawyers and others who do all the financial manipulation. They are the wizards of our society, and they are compensated the most.
It is an odd situation when some of the finest surgeons in the world are paid much less than people managing dance halls. A week or two ago I saw that a leading dance hall company was advertising for managers to take over the management of small dance halls up and down the country, and it was offering £15,000 a year. In the same newspaper there were advertisements for experienced and technologically advanced engineers to do extremely responsible jobs creating some of the most advanced and imaginative concepts in the world, and the salaries they were offered were about £4,500 a year.
Between dance hall managers and engineers or surgeons there is this curious differential. Some of our greatest thinkers are paid the least. So we are all con-

cerned about differentials in this immediate situation, whether they are at the wage level or at the professional level, if we are to get some sort of order into a confused society.

Mr. Palmer: All the people to whom I have referred are workers. They can live only by selling their knowledge and skills. I am glad that my hon. Friend has made a differentiation between those people and those who live by other means altogether.

11.45p.m.

Mr. Atkinson: This is precisely the point. It is my experience, and I am sure that of all hon. Members, that the entrepreneur, the gambler, the person who plays the Stock Exchange, the fellow who manipulates the accounts in insurance, the "bod" who makes no significant contribution to our society but merely tinkers with the fabric, is compensated at the highest level. He is revered, he tops the honours list, he goes for all that is going. All that glitters in our society is presented to him. But the people upon whom our progress depends, the very essence of our society, are paid the least. So it is in the wage-earning world. The people with whom I associate who have a weekly wage packet also suffer from this lack of fairness in society.
I am on the side of those who want to shrink differentials to create more fairness. I understand all the problems attaching to this matter. It will be many years—I doubt whether it will be in my lifetime —before we arrive at the state of affairs where we can judge the value of one industry against another or one group of people against another, where we can get common acceptance of these values, and people can begin to take from society the equivalent of what they put in. If that can be done by common agreement, I believe that we shall be well into our Socialist society.

Mr. Brian Walden: A number of issues have arisen as a result of the amendment which are worth at least a cursory comment.
I do not think that the Labour Party has ever disagreed with the proposition that differentials are too wide. All my right hon. and hon. Friends know how the differentials came to be set. They were set partly as a result of market forces and partly—this should be said


frankly—as a result of trade union bargaining pressure. Where it existed we tended to get a better deal; where it did not exist, we tended to get a worse deal. If women are less well treated than men in terms of income, it is because they have been the most poorly organised group in our society.
I agree with my hon. Friend the Member for Tottenham (Mr. Atkinson) that we need pro tanto agreements. Though this is partly a matter for the Government—a responsibility which they do not appear to intend to undertake—it is also a matter for the trade unions. In any wage negotiations the trade unions must put forward pro tanto arrangements. Some could argue that it will be easier under the arrangements that the Government have devised, because of the clauses about the lower paid.
I am concerned not with this sham of a Bill but with the future years about which my hon. Friend spoke. The Labour movement can make an enormous contribution towards narrowing differentials if it always goes for pro tanto agreements. What it cannot go for is the rubbish of the hon. Member for Cornwall, North (Mr. Pardoe)—namely, job satisfaction. If we paid people on job satisfaction, the guards at Auschwitz would have had the biggest salaries in the world. That is nonsense. One can conceive of a situation in which the judge does not enjoy his job but the court usher does. The idea that one can go around and find the people who are not enjoying their jobs and pay them proportionately and then discover those who are and deduct something from their salaries is piffle, and has nothing to do with Socialism of any kind—

Mr. Pardoe: Nor does the hon. Member.

Mr. Walden: The hon. Gentleman is quite wrong. My hon. Friend the Member for Tottenham and I, and sometimes my hon. and right hon. Friends on the Front Bench and I, do not always agree, but we do work in a broadly similar direction, and we do work on the basis of a change in property relationships. We are coming to this, but until there is some substantial change there, the differential problem is a matter for the

Government and the unions. But it should be isolated from the issue of job satisfaction. That is not a justifiable or sane basis on which to differentiate between people's monetary income, under any system—Socialism, capitalism or what the Government are now providing for us.

Mr. Maurice Macmillan: These amendments are attempts to write into the Bill guidelines for the Pay Board on matters which should properly be dealt with in the code. It is for this reason that I ask the House to reject them.
My hon. Friend the Member for South Angus (Mr. Bruce-Gardyne) asked me about militants. Militancy started under the previous Government, was checked for a while under our Government, and started again later. I agree with him that the best way of helping the low-paid is by decreasing the rate of inflation. I also hope that we shall be able to resume the talks with the unions and employers on the special problems of the lower-paid, which was a feature of the original tripartite talks, and which I hope might be considered as a separate and special problem.
The terms of the agreement mentioned by the hon. Member for Bristol, Central (Mr. Palmer) were not imposed by the Government, and the formula to which he objected leaves room to negotiate. As to the amendment dealing with maintaining real value in terms of purchasing power, paragraph 75 of the Green Paper says that the first of the principles of the code relating to pay is
to limit the rate of increases in pay in money terms to a level more in line with the growth of national output, so as progressively to reduce the rate of price inflation and improve the prospect of sustained faster growth in real earnings.
I am not sure how the hon. Member arrived at his calculation. Using the £1 plus 4 per cent. formula in the case of these staffs, he came mysteriously to a figure of 5·8 per cent. for that bargaining group, rather than 7 per cent., as is the case for most. I would have to consider this case in greater detail.
The subject of the Budget has been raised, but that is not a matter for me or any Minister to speculate on. The hon. Member for Tottenham (Mr. Atkinson) took the argument about


differentials rather wider, and it developed into an argument with his hon. Friend the Member for All Souls—[Laughter.] I apologise. I mean the hon. Member for Birmingham, All Saints (Mr. Brian Walden). It was the nature of the hon. Member's argument which led me to make a perfectly natural slip. Both hon. Gentlemen seemed to have an element of reason in their arguments, although I could not agree with all they said. I could not say the same about the arguments of the hon. Member for Cornwall, North (Mr. Pardoe). I found myself lost in a maze trying to follow the thread of reasoning through the words behind which he successfully hid it.
The hon. Member for Tottenham returned to the narrower point about differentials when he talked about the market rate and the bargaining power of the unions. I say to him, to my hon. Friend the Member for South Angus and to the hon. Member for Tottenham, that the erosion of differentials is not in itself necessarily affected by the £1 plus 4 per cent. formula as used as a method of calculating the total amount available as a pay limit for a negotiating group.
The hon. Member for Tottenham referred to the courage of the unions—some of them representing highly-paid people—in suggesting a flat rate. It would have been fairer, with a narrowing of differentials, if the tripartite talks had produced agreement on a flat rate to be applied across the board. But it is not an easy concept to introduce. It is simple to formulate as a concept, but in our complex pay structure it is not easy to introduce and it was the failure to get agreement on that point which led to the present policies.

Mr. Bruce-Gardyne: I accept that the £1 plus 4 per cent. formula does not in itself necessarily lead to an erosion of differentials, but surely my right hon Friend would agree that the £250 limit does.

Mr. Macmillan: Yes. The emphasis in the tripartite talks and thereafter was on helping the lower-paid, and certainly the ceiling of £250 limits the capacity of the higher-paid to get increases in salary.
I say to the hon. Member for Bristol, Central, who started by saying that he was opposed to some of his hon. Friends

on incomes policies generally, that I thought he was arguing against some of his hon. Friends in an earlier debate this evening. He wanted to make the code and policy less flexible by writing bits of it into the Bill. His hon. Friends were seeking to make it more flexible. The reason for the degree of flexibility we have sought to achieve in the formula is simply that it seemed important to the unions concerned when we were discussing it at various stages. Apart from the limiting effect of the £250 there is no necessity, in the method of negotiating, to give a specific advantage to the lower-paid, although it is an expressed hope of the Government. The formula has to be like that because it is the intention that it should have that effect.
The hon. Member referred to a problem that has arisen in his and in one or two other industries, including the Post Office, where different parts of the same industry have different negotiating dates. That has led to one section being caught by the standstill and another section not being caught. It is precisely to deal with these sorts of anomalies that the Pay Board will give them early consideration during the course of phase 3, so that they can be rectified in the course of the next pay rise. I fully accept that this has led to considerable difficulties in comparisons between the supervisors and others and that it is a problem which will require early attention by the Pay Board.

Mr. Palmer: Will the Secretary of State therefore give me an assurance that in cases like this, if it were found that in terms of real standards the incomes of one group compared with another had been reduced, it would be possible for the Pay Board retrospectively to put the situation right?

Mr. Macmillan: In applying the policies of stage 2 the Pay Board will be bound by whatever are the terms of the code, after the consultations and debate have taken place on this document and the House has debated the draft code. The Pay Board will take this type of problem into consideration in advising on how to formulate the guidelines for stage 3 which, after consultation and debate in the House, we intend to embody into a code for stage 3. I can assure the hon. Gentleman that I am aware of the problem


that exists in his industry and one or two others.
12 midnight.
We have had a fascinating debate on a somewhat narrow point. The hon. Member for Bristol, Central will accept that whatever assumptions one makes about his arguments and whatever conclusions one reaches on the points he has raised, they are matters of guidance for the Pay Board, and are therefore more appropriate to the code than to the Bill. They would be severely limiting on any freedom of action, in a way which has been deplored by the Opposition, particularly if they were written into the Bill. For those reasons I ask the House to reject the Amendment.

Amendment negatived.

Clause 3

COMMENCEMENT OF PART II

Mr. Ronald Bell: I beg to move, Amendment No. 51, in page 3, line 17, leave out from 'transaction' to end of line.

Mr. Deputy Speaker (Sir Robert Grant-Ferris): With this amendment it will be convenient to debate Amendment No. 48, in Schedule 3, page 24, line 36, leave out from 'whatsoever' to end of line 40.

Mr. Bell: After the wild gallop across country which developed as a result of the amendment moved by the hon. Member for Bristol, Central (Mr. Palmer), my amendment may seem a little static, but it is nevertheless important.
The amendment to Clause 3 is a mere paving amendment for the main amendment in Schedule 3. The amendment would remove from the Bill the right of the Minister to interpret the provisions of Part II. Paragraph 1(1) of Schedule 3 states that
An order or notice under Part II of this Act may be framed in any way whatsoever".
If my amendment were accepted the paragraph would end there, but as at present drafted the paragraph continues:
and may define any expression used in the provisions under which it is made or given (other than an expression defined by section 18(1) of this Act) both for the purposes of the order or notice, and for the purposes of the

said provision as it applies in relation to the order or notice.
That provision is very similar to the provision which exists in the Counter-Inflation (Temporary Provisions) Act. It happened that I was asked to advise professionally upon that similar provision in that Act. It was then—and, I am afraid, only then—that I found that no one could be advised on his rights under the Act, and that it will not be possible to advise anyone of his rights under Part II of the Bill. In each case the application of the provisions in the statute is by the making of an order or the serving of a notice. The Act does not take effect of itself; it is applied to provisions by a Minister's serving a notice or making an order. In that order or notice the Minister may say that anything in Part II of the Act means what he says it means, and that is conclusive.
The exception in Clause 18(1) is unimportant. At this hour I shall not go through the reasons why it is unimportant. Clause 18(1) defines certain things of a fairly obvious character. The sort of examples which may be interpreted by the Minister in an order or notice are of the greatest significance. I shall mention a few of them to show how it would apply. There is, for example, the phrase "increases in any prices", the words "remuneration" and "implementation" of an increase, the word "restrict" and, above all, the word "transaction", which can be given any meaning at all in an order or notice by the Minister. There is the word "selling"; the phrase "performing services"; the words "restriction", "agreement", "arrangement", "employee", and "payment". There is the phrase "terms or conditions of employment", and so on. I shall not go through them all, but it is above all the word "transaction", and the freedom to give any meaning at all to the expression "relevant transaction", which puts the subject completely at the mercy of the Minister. There can be no appeal to a court, because the Minister can make the law as he goes along. And if notices are mainly used, as seems most likely, there is no possibility of challenge in this House, because notices cannot be challenged here.
Wide drafting, which is carried to extreme limits in the Bill, is one thing, and one might argue that the need justifies


the means, though I find that a hard argument to accept in peacetime. But the conferment on Ministers of a power to give any meaning convenient to them to the words of an Act of Parliament, and to do so in a way which withdraws their exercise of that power from the scrutiny of this House as well as of the courts, is immensely objectionable and inconsistent with the practice of a free society in which people have defined and ascertainable rights and defined and ascertainable duties.
It is no answer to say that Ministers are answerable to this House generally for the discharge of their duties, for a Parliament so dominated by the executive that it would concede to it the right to interpret the law conclusively would not be a Parliament that would call the executive to account for oppressive use of that power.
Nor is it any answer to say that the discretion otherwise given to the Minister in this Bill is so wide that this further power hardly matters. If the power is unnecessary, it is all the more objectionable. But the objection I make in the amendments is not that the powers are wide, as they are—too wide, I think—but that they have no defined limit. It is not that a person within the scope of the Bill is subject to a wide discretion but that a person cannot know whether he is or is not within the scope of the Bill. He cannot be advised about that because a Minister can make Part II mean anything he wants it to mean. He is given an unlimited right of interpretation of any expression.
That was bad enough in the three-months' temporary provisions Act. We should not let it through in that measure. I confess that I did not then notice those words in the schedule. In a measure that is intended to last three years such a provision is a constitutional outrage.
I hope that my hon. Friend the Chief Secretary will not offer a collection of bad precedents. Some dreadful things escape the notice of this overloaded House. Great battles are sometimes joined on the early clauses of a Bill, but incredible things slip through in the calm after the storm. I do not believe that in peace or war there is any parallel, in scope and importance, to the delegation of parliamentary sovereignty to what the amendment relates.
I hope that we are about to hear from my hon. Friend that at least the principle of the amendments is accepted. At this hour I do not intend to press the amendment to a Division. I doubt whether there is anything left to divide. After the hilarious episode through which we have just lived I doubt whether there is even the energy left to divide. But I impress upon my hon. Friend that this is not a trivial matter. Far too many things go through the House unnoticed. I should not have noticed this extraordinary power in the Bill if, in another capacity, I had not been called to scrutinise the existing temporary provisions Act. I do not think that most hon. Members on either side are aware of the power conferred. I am sure that it is unnecessary. It goes far beyond what the circumstances of the time require, and it is a lamentable precedent for the future.
Inasmuch as the Bill can be operative as an Act without the power, and inasmuch as the power would entrench inescapably upon the proper rights of the people, I hope that my hon. Friend will not brush the matter aside as merely one of the appurtances of an emergency Bill that we should take along with all the rest without looking too closely at it.
These things do matter. Too many of them go through the House late at night. Too many slip through in schedules, and the matter before us should not be allowed to go through at all.

Mr. Peter Rees: Although I find the Bill unpalatable, I recognise the need for it and support it in principle, but it equips the executive with far-reaching powers over every aspect of our national economic life. Beyond that, the executive have equipped not only themselves but the commission and the board with such powers. It is therefore of supreme importance that the House should scrutinise with great care the powers conferred by the Bill.
Like my hon. and learned Friend the Member for Buckinghamshire, South (Mr. Ronald Bell) I am appalled by the scope of the powers contained in paragraph (1) of Schedule 3. The point was raised in Committee, when I found the answers of my hon. Friend the Chief Secretary singularly unconvincing. I should like to give


some examples of the kind of construction an order could put on the simple words contained in Part II.
12.15 a.m.
The word "company" could be defined as a unit trust; "debenture dividend" as including interest, and "pay" as including a Christmas gift. My hon. Friend the Chief Secretary, possibly without the assistance of our right hon. and learned Friend the Solicitor-General, attempted to import some concept of reasonableness. He said that the courts were bound to insist on some concept of reasonableness being inserted to circumscribe the powers of definition in the Clause. I know of no such overriding power as my hon. Friend has invoked. The courts may say that the definition must bear some relation to the Bill, but this is a very tenuous connection. If this provision is construed in the way suggested it will be largely otiose.
If it is, in other words, merely to clarify an expression in Part II, it is pointless, because the courts would always allow a word to be defined in that way, but sub-paragraph (1) has given the executive power to enlarge the scope of the phrase used in Part II. It is designed to bring within the definition of "company" things which in the ordinary use of language would not be included.
In Committee my hon. Friend said—I hope that I interpret him correctly, having read it—that the provision must be read as defined—as limited in some way —by the introduction of the code. I see no connection between this provision and the code. The code would not be considered by the courts as limiting the power of definition. We recognise that "company" could not be held to include "elephant", because the courts would recoil from such a definition, but there is much scope on the fringe for matters to be swept into the provisions of the Bill without people recognising it.
As the years go by there seems to be a growing tendency for the Legislature to legislate for overkill. That is utterly wrong, for one knows the power of the executive and its capacity to force unpalatable legislation through both Houses. It is important that it should limit the powers to those strictly necessary for the operation in mind. It has

gone far beyond the necessary powers in this case.
There may well be a case for bringing in unit trusts, dividends, debenture interest and Christmas gifts, but if that be so let the case be made on substantive parts of the Bill, and in such a way that it can be debated on the Floor of the House and not in a roundabout, covert way by a subsequent order.
As my hon. and learned Friend said, at this late hour we shall not press the matter to a Division, but we expect much greater reassurance from the Chief Secretary than he was able to give in Committee.

Mr. Brian Walden: I need not detain the House as long as either hon. Member opposite has—and that implies no criticism of them. The hon. and learned Member for Dover (Mr. Peter Rees) said the Bill was unpalatable but that he supported it in principle—which says a good deal more for his loyalty than for his sense, because what he is complaining about, not having had the high and joyous privilege of being a member of the Standing Committee, occurs in every clause of the Bill. The hon. and learned Member had better get used to the idea that he is buying a pig in a poke.
Of course the hon. and learned Gentleman will not receive an answer that satisfies him, and it would be out of order for me to tell him of all the many other occasions on the Bill when he will similarly not get answers to matters which are of legal concern which affect the philosophy of his party and the lives of his constituents. The hon. and learned Gentleman had better get used to that idea.
What the Conservative Party as a whole has to get used to is the idea that, probably for the first time in its history, it has underwritten the massive power of the executive to do more or less as it chooses and defines with private interests. That is the price which the hon. and learned Gentleman must pay for supporting the Bill in principle.

Mr. Peter Rees: The hon. Gentleman has impugned my sense. I said "unpalatable", not "very unpalatable". I said that I recognised the need for the Bill. I believe that the party to which I am proud to belong is prepared, in


moments of national need, not to be over-concerned with dogma. I should find it difficult to reconcile this with the dogmatic utterances made by myself before I was in the House—when the Labour Government were in power—and the dogmatic utterances of hon. Members who grace the Front Bench and adorn my party, but in a moment of national need my party is not going to be concerned overmuch with the niceties of dogma.
I am complaining not about a question of principle but about the detail of the Bill. The hon. Gentleman said that there are many points of detail, but this is a particular point on which I take issue with my hon. Friend, and I do not feel that it is any discredit to my sense.

Mr. Walden: I am sure that the hon. and learned Gentleman will not think me discourteous if I say that I find him somewhat cumbersome. Mr. Disraeli put it much better as an exposition of Toryism when he said
Damn your principles! Stick to your party.
That is what the hon. and learned Gentleman is doing, and he knows it as well as I do. That is what makes the hon. and learned Gentleman a Tory and me not. I do not believe in that creed. The hon. and learned Gentleman will damn his principles and stick to his party.
I can tell the hon. and learned Gentleman that he will not get satisfaction on this matter. We had no code in Committee, and there is no code now. We have a Green Paper which, apparently—as my old friend the Chief Secretary said today—contains a number of unfortunate printing errors, which may or may not, subject to the House, ministerial second thoughts and everybody else's second thoughts, eventually emerge as some kind of code.
The hon. and learned Members for Buckinghamshire, South (Mr. Ronald Bell) and Dover have more sense than to think that they will get any kind of satisfaction on a matter such as this. They must lump it. I think that they are right in saying that this provision conveys enormous powers upon the executive. The Chief Secretary will tell us, as he always does, that these powers will be limited by the Government's good sense, and that is the best that we can expect to get. For God's sake, why

strain at a fly when one is prepared to swallow a camel? What the hon. and learned Gentlemen should be worrying about in the 1922 Committee is why, in the name of Heaven, the Conservative Government are prepared to take this Bill at all. The amendments are irrelevant, and from the Opposition's point of view the Chief Secretary can be as brief as he likes.

Mr. Patrick Jenkin: Almost all this legislation is acutely unpalatable to Ministers and to members of the Conservative Party. That may be a measure of the degree of necessity which exists for it.
I have a great deal of sympathy with the points made by my hon. and learned Friends the Members for Buckinghamshire, South (Mr. Ronald Bell) and Dover (Mr. Peter Rees). I, too, was dissatisfied with the answer that I gave in Committee when the matter was raised by my hon. Friends the Members for Oswestry (Mr. Biffen) and Cirencester and Tewkesbury (Mr. Ridley), and although I then gave no undertaking to return to the matter on Report I immediately instituted an inquiry with those who advise the Government to see whether there was a better way of achieving our objective here.
Like my hon. and learned Friend the Member for Buckinghamshire, South I am referring to Schedule 3(1), which is the substantive provision. In Committee I explained why we felt it necessary to have what are admittedly wide powers of definition. Perhaps I can begin to reply to the powerful attack by my two hon. and learned Friends by saying that the powers are not quite as wide as they appear at first sight.
I know my hon. and learned Friend the Member for Dover challenged what I said about the reasonable interpretation. I stick by that. I believe that any court called upon to consider an order or notice —and they are challengeable in the courts —which imported a definition of a phrase used in a provision conferring power to make an order or notice would be bound to apply a concept of reasonableness in the exercise of that power of definition.
It would not be merely the "black cannot be white" example I used in Committee or "a company" cannot mean "an elephant". It would be a question of


what is "reasonable" having regard to the overall intentions of the Act, as embodied in the legislation passed by Parliament. Further, the court would be bound to have regard to the terms of the code. The agencies, as well as the Minister, have power to make orders and issue notices under Part II. When the agencies exercise the power to define expressions they are wholly circumscribed by the code—which will have been debated in draft and subsequently, if Parliament is so minded, passed into law. They are enjoined by the Bill to exercise their powers to restrict pay or prices for the purpose of ensuring that the provisions of the code are implemented.
They would not be able to use the power conferred by this paragraph to bring within their purview any matter expressly excluded by the code. As an illustration, let me put this to the House. It is clear that the agencies cannot, by the use of this sub-paragraph, or any other provision in the Bill, confer upon themselves power to issue price reduction orders or notices affecting, let us say, insurance premiums, under the first new clause that was incorporated into the Bill this afternoon.
This is because, provided the code follows the line of the consultative document, that control on insurance premiums will be reserved to the Secretary of State as a consequence of new Clause 1. I quote that as an example. I differ with my hon. and learned Friend the Member for Dover, who has greater legal training than I, when he says that the code is irrelevant. The power which will be exercised by one of the agencies must have regard to the code and it cannot exercise power in a way that goes outside the code. Therefore, it cannot exercise its power to define a provision in a way that takes it outside the code.

Mr. Peter Rees: Perhaps I put the case a little high in making the point. I intended to say that no definition or restriction of definition can be found in the code to limit the power, although I recognise the point that my hon. Friend makes, that the commission or board have power to perform its functions in implementation of the code. The point may be of considerable interest in the City, and to insurance companies. Clause 6(2) provides that

For the said purpose the Price Commission may restrict any prices or charges for the sale of goods or the performance of services in the course of business…".
Notwithstanding the new clause that was introduced this evening—and I do not recall that that limited insurance to the purview of Ministers—the agency could, under paragraph 1 of Schedule 3, define the performance of services as including the business of insurance. Therefore, it would be perfectly proper for the Price Commission to make orders in relation to the insurance business. Will my lion. Friend deal with that?

12.30 a.m.

Mr. Jenkin: Clause 2(1) provides that
it shall be the duty of the agencies to have regard to that code in performing their functions under this Act.
The Government intend that those words should be limiting. They limit and define the powers of agencies so that they cannot act outside the terms of the code. Although the words in Clause 6 would, on the face of it, entitle the agencies to make orders about any price or charge, in fact they are constrained by Clause 2 to have regard to the code. The words limit the power not only to make orders but to define provisions under paragraph 1 of Schedule 3.

Mr. Brian Walden: Why be so modest about it? There is a further limitation. If the Minister does not care what the agencies have done he will make use of his appellate functions and override them, and return to the status quo ante.

Mr. Jenkin: The hon. Gentleman is making mischief, but he does so in such an engaging way that it is difficult to feel any malice towards him.
Within these limits the powers conferred by the sub-paragraph are, in the Government's view, essential. I have satisfied myself of this. They are essential to enable the control powers to be exercised effectively and clearly. In the interests of the persons affected it is obviously desirable that orders and notices imposing restrictions should be as precise as possible.
Here I refer to a point that was made repeatedly in Committee. The code does not set up legal obligations or restrictions. Those arise only when one of the agencies, or a Minister, makes an order or issues a notice in pursuance of


the code. Therefore, what is important is that the notices or orders should define with the greatest possible clarity the ambit that they are intended to cover.

Mr. Ronald Bell: What is equally important, if not more important, is that the individual—a company, perhaps—should know where he stands and whether he is subject to an order or notice. How can he be advised whether he falls just outside or just inside the purview of the Act? He may go to a lawyer, like myself, but how can he be advised when there exists power to define so that the boundary line is not clearly drawn but diffuse? Not to be able to tell someone whether or not he is within the scope of the Act cannot be in accordance with our traditions.

Mr. Jenkin: Because the order or notice sets up the legal obligation it is important that it should define its scope as precisely as possible. The extent to which a person may be potentially within the ambit of an order or notice which may be contemplated cannot, by its nature, be determined. We are not dealing with fiscal legislation, where a person over many years—subject to one or two notable exceptions, of which we are aware —is able to say with a fair degree of certainty whether he is within or without the charge to tax. This legislation is not that kind. Having regard to the purpose of the Bill, the broad intent, the necessity for which my hon. and learned Friend the Member for Dover acknowledged, unpalatable though it may be, it is essential to include a power of this sort to ensure that we sweep up, as it were, within the terms of any order or notice particular kinds of pay or price or charge which might not, on an ordinary judicial interpretation of these words without an extended definition, be apt to include them.
I give another example. It is desirable that the expression
charges for the performance of services
should be capable of applying to sums which are clearly payments for services, whatever they may be called. They may be called "admission charges", but they are, in fact, payment for services. It is right that in these circumstances—if it is deemed necessary, as it was under the Counter-Inflation (Temporary Provisions) Act, to issue a notice restraining certain

admission charges—it should be made clear that they are within the scope of the notice issued.

Mr. Peter Rees: It is important to clarify these points. Does my hon. Friend mean that the court will have no regard to the form of a transaction when applying the terms of the Bill?

Mr. Jenkin: I do not think that is a question I can answer.

Mr. Brian Walden: I am sure it is not.

Mr. Rees: Perhaps I phrased it badly. Is it the Government's intention that the court should have no regard to the form in which a transaction is cast?

Mr. Jenkin: If an order were made embodying a definition extending—shall we say?—to the word "charges" a particular meaning, if the question were at issue in the litigation the court would be bound to have regard to the use made of this paragraph to give an extended meaning of the word "charge"; whether that was reasonable, having regard to the general purport of the legislation, and whether it was comprehended, supposing an agency had made the order, within the terms of the code.
Clearly the court would have regard to the nature of the transaction to which the order or notice was directed. It could not otherwise construe the power that had been used. Deciding, "Was one comprised in the other?" will be a difficult question—difficult enough for the court and even more difficult for a lawyer advising his client. But by the time the lawyer is advising his client he has the order or notice. That is the point at which the legal obligation arises.
My hon. and learned Friend mentioned the phrase "relevant transactions". It is essential that it should be capable of definition in many different circumstances which apply, on the one hand, in relation to sales or agreement for sale of goods and, on the other, to charges for the performance of such services, for instance, as aircraft flights.
I turn now to the question of sale or agreement. It may be important to know whether a transaction comes under the Counter-Inflation (Temporary Provisions) Act or under this Bill. If it is an agreement for the sale of goods at


a future date, is the transaction to be regarded as coming at the time when the agreement was made, which might fall within the Counter-Inflation (Temporary Provisions) Act, or at the time when the goods are delivered or appropriated to the contract, which might fall within after phase 2 is in operation? It is necessary to ensure that it will be made clear in the notice which transaction is to be regarded as the relevant transaction for the purpose of the notice or order. It is necessary for the person concerned to know where he stands.

Mr. Ronald Bell: That is why I attached importance to the phrase "relevant transaction". It means that the Minister can decide which phase he will put it in. The Minister can decide whether it comes under the temporary provisions Act or under this Bill. By a suitable definition of "transaction", the powers can be used retrospectively. The contract may be terminated, the payment finished, and then, by definition, transaction "may include the carrying out of a contract so that the Minister can catch people at almost any time afterwards. This is thoroughly oppressive, because no one will know where he stands until a notice has been made, and then he cannot appeal against it.

Mr. Jenkin: I hesitate to meet my hon. and learned Friend's legal arguments head on because he is a much more experienced lawyer than I am, but I should have grave doubts whether we could define a transaction as referring to a transaction which was past and finished and no longer in existence—

Mr. Bell: Still being executed.

Mr. Jenkin: Then one would have to refer to the transaction as it was in being at the time. However, I take my hon. and learned Friend's point. I conceded in Committee, and I have conceded on Report, that these are very wide powers. However, in the Government's view—and I have examined the matter with great care—they are essential if the general purport of the legislation, which the House has accepted, is to be carried into effect.
Over the years the words "remuneration" and "pay" have been given a

variety of different and conflicting meanings in the courts. That alone points to the need for a power to define what one meant when making an order or notice referring to a particular kind of employee benefit. In addition, pay negotiations are becoming increasingly sophisticated. Many fringe benefits which hitherto perhaps have not often figured in the negotiations are now becoming more frequent. I refer to paragraph 113 of the Green Paper to show the range of benefits which may be included.
Ideally, and in theory, one should be able to spell out in the Bill every one of those benefits. In practice, it is asking the impossible. The ingenuity of employers and employees in inventing new forms of employee benefit is limitless. It would be unfortunate, and contrary to Parliament's intention in giving the Bill a Second Reading, that people should be able to circumvent the main purposes of the Bill by methods of that sort. Hence, this power is needed to extend to these other forms of remuneration the order-making, notice-giving power in Part II.
I have been referring to orders and notices made by the agencies. Orders can be made by Ministers—for instance, in relation to insurance premiums, dividends and rent. On dividends, I repeat what I said in Committee. I regard it as highly improbable that the word "dividend" could be construed to include interest, in the ordinary sense, though the code clearly indicates that there might be certain kinds of interest which are dividends dressed up as interest which are a distribution of profits and not a charge on the profits. In that case, it would seem not unreasonable that the definition should be extended to include them. But it would be an unreasonable extension of the word "dividend" to include straight interest—debenture interest or interest on a bank loan. That would be a matter for a court ultimately to decide.
In so far as one is dealing with orders made by Ministers there is a further safeguard. Use of the power will be subject to scrutiny by the Joint Committee on Statutory Instruments. The sub-paragraph is needed for ministerial orders and notices since in the light of the circumstances of each case, it will be necessary to define such expressions


as "premium", or "insurer"—in relation to syndicates of underwriters or even brokers— "ordinary dividends", "distributions", and so on. The phrase
restricting or preventing increases of rent
in Clause 10 is another phrase which would need to be defined to get round the massive ingenuity of those who deal with property if they are not to be allowed to circumvent the Bill's intentions.
12.45 a.m.
I hope that I have said enough to make it clear that it would be extremely difficult to include any express limitations on this power—let alone to spell out the complete parameters of the power—without running a real risk of providing opportunities for those who are determined to seek loopholes and thereby frustrate the purposes of the Bill.
In Committee we referred to the long list of suggestions made by Mr. Clive Jenkins as to the way in which members of his union might circumvent the provisions of the Bill. We realise that we need to combat the ingenuity of such men if the purposes of the Bill are not to be frustrated. The important thing is that this subparagraph enables definitions to be made to deal with a widely differing variety of matters that fall within the scope of the Bill, but they do not and cannot be made to deal with matters falling outside the scope of the Bill and to deal with powers of the agencies. They cannot be made to deal with matters that fall outside the scope of the code.
I, too, regard powers of this sort as distasteful. I regard the whole legislation as distasteful, but if that legislation is to carry this policy into effect and not be frustrated, I believe that powers of this nature are necessary in the Bill.
In the light of this explanation, I hope that the House will accept that I have carefully considered both what my hon. Friends said in Committee and the points made by hon. Members today, but I cannot advise the acceptance of these amendments.

Mr. Brian Walden: I shall not detain the House for more than a few minutes. The Chief Secretary ploughed on like the battleship "Potemkin", for the simple reason that what is in the mind of the hon. and learned Member for Buckinghamshire, South (Mr. Ronald Bell) is the position of the man on the Clapham omnibus. He is trying to get a definition of "reasonable", but the Chief Secretary —a shrewd old bird—has been conning him along with the idea that somewhere in this legislation there is something that has some kind of applicability to the sort of law that the hon. and learned Member understands.
That is why the Chief Secretary tried to shrug off what I said as a joke. It is not a joke. I repeat—for the benefit of the hon. and learned Member—that it is true. If the Secretary of State does not like what one of these agencies has decided he will not implement it. If he does not think that it has gone far enough he has reserved the right to himself, in the Bill, to put in incidental or supplemental propositions. He can switch it and turn it to suit himself. This must be a surrender of authority to the executive. The Chief Secretary can talk all night. He can wring his hands and talk about his grief at this unpallatable legislation, and it will not change one jot or tittle. The Conservative Party had better get that idea into its head. It is true. It is not a joke; it is a fact.

Amendment negatived.

Further consideration of the Bill, as amended, adjourned.—[Mr. Patrick Jerkin.]

Bill, as amended (in the Standing Committee) to be further considered this day.

ADJOURNMENT

Resolved, That this House do now adjourn—[Mr. Goodhew.]

Adjourned accordingly at eleven minutes to One o'clock.